Noun
broad form | brôd fôrm
Definition: A type of home insurance policy offering comprehensive coverage on the insured dwelling, and named perils coverage on contents.
Tanya’s insurance broker recommended broad form coverage for her vacation home.
When it comes to home insurance, there are three types of policies:
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.
Example
Kalisha owns a house, one that she’s lived in for the past ten years. She has a broad form insurance policy to protect her home and her belongings. Her dwelling is protected from most perils, except for a few that are excluded. Her contents, on the other hand, are only protected from four named perils: fire, theft, smoke, and flood.
One day while Kalisha is at work, a water pipe in her ceiling begins to leak pretty badly. By the time she gets home, it’s too late: the damage has been done. Her living room ceiling, one of the walls, and a big patch of the floor are completely waterlogged. As luck would have it, the leak happened right above her expensive couch. It’s completely soaked as well.
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.
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As we talked about in the previous section, broad form insurance policies offer comprehensive protection for the building, and named perils protection for the stuff inside the building.
Comprehensive coverage protects against any peril, except for the ones that are specifically excluded. Excluded perils are different from policy to policy, so make sure you review your policy wording to be sure about how your home is covered.
Commonly excluded perils include:
The named perils coverage for contents will vary even more from insurer to insurer. If you’re buying a broad form policy, make sure you’re clear about which perils your contents will be protected from. If you’ve already got such a policy, refer to your policy wordings.
Commonly covered perils include:
Broad form home insurance policies offer comprehensive protection for dwellings, and named perils coverage for contents
Broad form home insurance policies are slightly cheaper than comprehensive policies, sacrificing some coverage in return for the savings
Looking for another insurance definition? Look it up in The Insurance Glossary, home to dozens of easy-to-follow definitions for the most common insurance terms. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Daniel Mirkovic
A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.
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