Home Insurance: What is Broad Form Property Coverage?
When it comes to protecting your home, having the right insurance coverage is crucial. Various types of home insurance policies are available, each offering different levels of protection. One option that strikes a balance between good coverage and affordability is broad form insurance. In this article, we will delve into the details of broad form insurance, exploring its coverage, advantages, and considerations.
What is Broad Form Insurance?
Broad Form Insurance at a Glance:
- Dwelling Coverage: Comprehensive protection for your main home and attached structures against most risks, except those specifically excluded.
- Contents Coverage: Named perils protection for your personal belongings, covering only specific risks that are explicitly listed in the policy.
Under a broad form insurance policy, the dwelling, which includes the main house and attached structures, is protected from a comprehensive range of risks. The real difference is that with a broad form, you have less coverage for your contents. It’s a trade-off that can save you money on your premium, but you take on more risk for your personal property.
Coverage Options in Broad Form Insurance
Dwelling Coverage
It’s the part of your insurance that focuses on protecting the actual structure of your home, the physical building itself. This typically includes the main house and any structures permanently attached to it, like a garage, deck, or porch. It also covers things like the plumbing and wiring, anything that’s a permanent part of the home’s structure.
It is important to note that certain perils are typically excluded from coverage, such as damage caused by settling, earth movement, and water seepage. These exclusions are not considered losses resulting from sudden or unexpected events covered by the policy.
Contents Coverage
This refers to virtually everything inside your home that isn’t a permanent part of the structure. It’s all the personal property you own and would likely take with you if you moved. Here are some examples:
- Furniture: Your couch, beds, tables, and chairs.
- Electronics: TVs, computers, sound systems, and other gadgets.
- Appliances: Microwaves, toasters, and any other appliances that aren’t built-in.
- Clothing & Personal Items: Your wardrobe, shoes, jewelry, and other everyday belongings.
With a broad form policy, the coverage for your personal belongings works a little differently than the protection for your house. This is where the concept of “Named Perils” comes in. “Named Perils” means that this part of the policy only covers your belongings against specific, explicitly listed risks.
Common Named Perils:
- Fire and smoke damage
- Theft and attempted theft
- Vandalism and malicious acts
- Explosion
- Lightning
- Windstorm or hail
- Impact by vehicle or aircraft
Advantages of Broad Form Insurance
Broad form insurance offers several advantages, making it an attractive option for homeowners. Some key benefits are:
Key Benefits of Broad Form Insurance:
- Comprehensive Dwelling Coverage: With broad form insurance, your dwelling is protected from a wide range of risks, providing you with peace of mind knowing that your home is safeguarded against unforeseen events.
- Affordability: Broad property insurance offers a more cost-effective alternative to comprehensive policies. It provides comprehensive coverage for the dwelling while limiting the perils covered for the contents, allowing you to save on premiums.
- Flexibility: With named perils coverage for contents, you can customize your policy by adding additional coverage for specific perils or items of value. This flexibility allows you to tailor the policy to your specific needs and preferences.
Considerations for Broad Form Insurance
Before selecting broad form insurance for your home, it is important to consider a few key factors:
Important Factors to Consider:
- Value of Contents: Assess the value of your personal belongings to determine if the named perils coverage offered is sufficient. If you have high-value items that require broader coverage, you may need to consider additional insurance options.
- Exclusions and Limitations: Familiarize yourself with the exclusions and limitations of your insurance policy. Understand what perils are excluded from coverage and ensure that you are comfortable with the level of protection provided.
- Comparison Shopping: As with any insurance policy, you should ask your insurance advisor if there are differences between the broad form coverage offered by each available insurer. For example, one insurance company may offer higher limits of included coverage for jewellery, watches and other high-value items than others.
Broad form insurance strikes a balance between comprehensive coverage for the dwelling and named perils coverage for the contents, providing an affordable option for homeowners and renters. By understanding the coverage options, advantages, and considerations of broad form insurance, you can make an informed decision when it comes to selecting the right insurance policy for your home.
Remember to review the policy wording, assess your coverage needs, and compare quotes to find the best policy that suits your specific requirements.
FAQs
What is the difference between broad form and comprehensive insurance?
Broad form insurance provides comprehensive coverage for your dwelling but only named perils coverage for your contents. Comprehensive insurance (sometimes called all-risk) offers the highest level of protection, covering both your dwelling and contents against all risks except those specifically excluded in the policy.
Are valuables like jewelry fully covered under broad form insurance?
Most broad form policies have special limits for high-value items like jewelry, collectibles, and electronics. If your valuables exceed these limits, you may need to purchase additional coverage through endorsements or riders to ensure they’re adequately protected.
Does broad form insurance cover water damage?
It depends on the cause. Sudden and accidental water damage from plumbing issues is typically covered for the dwelling under broad form insurance. However, water damage to contents may only be covered if it results from a named peril. Coverage for overland flooding, sewer backup, or groundwater usually requires additional endorsements.
Who should consider broad form insurance?
Broad form insurance is ideal for homeowners who want strong protection for their dwelling while being cost-conscious. It’s particularly suitable for those whose home value significantly exceeds their contents value, or who have fewer high-value personal belongings that would benefit from comprehensive coverage.
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Posted in Home & Tenant on November 18, 2021 by Harvard Western Insurance
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