Broad Form

What is broad form home insurance?

When it comes to home insurance, there are three types of policies:

1. Named perils
2. Broad form
3. Comprehensive

Broad form takes the middle slot on the list for a reason: it’s a middle-of-the-road policy option. Broad form policies balance the wide protection of a comprehensive policy with the affordability of a named perils policy. In theory.

In practice, it’s not quite so simple.

Broad form home insurance policies contain elements of both other policy types. So, it’s important to understand the basics of those policy types first. We’ll explain them quickly here, but make sure to check out the full explanations for both named perils policies and comprehensive policies. It’s not a bad idea to learn more about perils, too.

Perils are the causes of damage or loss. Fire, flood, smoke, wind, and theft are all examples of perils.

Named perils policies only protect against a few types of perils. They specifically state which perils they offer coverage against. If a loss happens, and the peril that caused it is not listed on the policy, then there’s no insurance coverage.

Comprehensive policies are the opposite: they protect against every peril, except for a few which are specifically excluded.

Now, we finally come to broad form policies.

Broad form policies are part comprehensive, and part named perils. Coverage is divided between the dwelling and the contents. The dwelling (a.k.a. building) is the house itself, plus any structure that’s attached, like a balcony or a garage. Contents are all the movable stuff inside the house, like furniture, electronics, clothing and so on.

Broad form policies provide comprehensive coverage for the dwelling, and named perils coverage for the contents.

In this scenario, we can see some of the advantages and disadvantages of broad form home insurance policies.

Thanks to the comprehensive building coverage, Kalisha’s home insurance will cover the damage to the walls, floor, and ceiling. That’s all part of the building, and her dwelling coverage doesn’t exclude leaky plumbing.

Unfortunately, she’s out of luck when it comes to the couch. The couch falls under contents coverage. Her policy protects contents from just four perils: fire, theft, smoke, and flood. A burst water pipe doesn’t fall under any of those categories, so her insurance policy won’t cover damage to the couch in this case.

Broad form policies have lower premiums than comprehensive policies, but the cost of replacing your furniture or other possessions after an uninsured loss can quickly wipe out the savings.

If you have a dwelling to insure, but you don’t have anything of value inside the dwelling, you might consider broad form insurance. Otherwise, the higher premiums of a comprehensive policy are usually worth it.