Insurance 101: Understanding Basic, Broad and Special Perils Coverage Types
When structuring your insurance policy with your local independent agent, the coverage type selected plays a significant role in determining the extent of coverage provided for your property. “Basic”, “broad”, and “special” coverage types are very different from one another. This is why it is so important for you to consider both the risks and price associated with each before finalizing your policy.
Basic Form Insurance Coverage
Selecting the “Basic” Form of insurance coverage will ONLY cover your property from named perils. This simply means your property will only be protected from the causes of loss that are specifically identified on your policy. Therefore, if you suffer a loss that is caused by something other than a cause listed on your policy, there is no insurance coverage.
The named perils covered in a Basic Form include:
- Windstorm or Hail
- Aircraft or Vehicle Collision
- Riot or Civil Commotion
- Sinkhole Collapse
- Volcanic Activity
While these causes of loss may appear to cover many of the events, it isn’t until you are made aware of the additional perils included on the Broad and Special Perils forms that you begin to realize the extent of risks your property might need additional protection from.
Broad Form Insurance Coverage
Broad form coverage is more encompassing than Basic Form coverage. The Broad Form is made to cover all perils the Basic Form covers, along with some additional common perils that could occur. Additional perils added to the Broad form include:
- Burglary/Break-in damage
- Falling Objects (like tree limbs)
- Weight of Ice and Snow
- Freezing of Plumbing
- Accidental Water Damage
It’s important to note that just as the Basic Form only covers perils named on the policy, the Broad Form only covers perils named on the policy as well.
Special Perils Coverage
Special Perils Coverage provides the most protection for your property. This type of coverage is very different than Basic and Broad Form coverage. Rather than providing protection for perils specifically identified on the policy, Special Form Coverage covers all perils UNLESS they are specifically excluded. This approach is also referred to as “open perils” coverage, providing a list of general events with specific incidents that are NOT covered within the policy being clearly listed.
Your independent insurance agent will help you determine which type of coverage level is appropriate for your property and your assets. Keep in mind that named perils coverage (Basic and Broad Form) often result in a lower premium due to the fact that you are carrying more risks and not including every situation regarding loss or damage.
*Disclaimer: This article is for informational purposes only and does not identify/describe coverage for any individual policy. All policyholders should reference their individual policy for coverage details.