The Enormous Difference Between Broad And Special Form Homeowners Insurance

There isn’t just one form of homeowners insurance and homeowners insurance most certainly doesn’t cover everything that could possibly happen to your home.  There are three types of policies, broad and special, with each type covering more than the previous.

Basic and broad form homeowners insurance

Basic and broad form homeowners insurance policies cover named perils.  This means if the coverage is not specifically named on the policy there is no coverage.  This drastically limits what is covered and what is not.  See the lists below outlining exactly what is covered under each policy.  If something happens to your home and it’s not on the list, no coverage.

Special form homeowners insurance

Then you have special form coverage.  Special form homeowners insurance is called open perils, meaning everything is covered unless it is specifically excluded.  This allows coverage for the screwball losses that you can’t even imagine until they happen (i.e. your neighbor’s kid using your vinyl siding as a place to practice his baseball swing).

The following list outlines the coverages included in each policy form.  (I have included examples of claims in parenthesis for perils that are not as clear).

Basic Form Policy

Covered Perils

• Fire
• Lightning
• Internal explosion (explosion originating from within structure)
• Windstorm or hail
• Explosion
• Smoke (resulting from fire or furnace puff-back)
• Aircraft or vehicle (airplane crashes on dwelling or car hits dwelling)
• Riot or civil commotion (like when the doors open at Walmart on Black Friday)
• Volcanic eruption
• Vandalism

Broad Form Policy

Covered Perils (in addition to basic form coverage)

• Burglary damage (damage resulting from a break-in)
• Falling objects (tree falling on dwelling)
• Weight of ice & snow
• Tearing, cracking, burning, bulging (pipe breaks spewing water all over dwelling)
• Discharge / overflow water or steam
• Freezing of plumbing
• Artificially generated electricity

Special Form Coverage

EVERYTHING IS COVERED!!!

Except:

• Ordinance or law
• Earthquake
• Flood
• Power failure
• Neglect
• War
• Nuclear hazard
• Intentional act

Insurance Take-away

Don’t assume that you have special form coverage.  The price difference is negligible but the coverage is infinitely better.   Please read this Tree.com post on Broad vs Special form coverage to learn more.  Call your independent insurance agent today to discuss upgrading your policy to special form.

Image credit: Flickr, stirlingab, Creative Commons Attribution-ShareAlike 2.0 Generic