Tuesday, November 15, 2016

Difference between Basic, Broad and Special Form?

What is Insurance Causes of Loss Form anyway?

What is the difference between Basic, Broad and Special Form? These coverages are commonly misunderstood if understood at all.

Basic Form
The Basic Form policy is the least comprehensive of the three coverage options.  Basic Form policies only cover the specifically named perils.   This means that if a coverage is not specifically named in the policy, there is no coverage.  A Basic Form policy tends to be quite limited in scope and should be used with care.  It is usually offered by carriers when the property is not in good condition, is under remodel, vacant or is old and without wiring, plumbing or heating updates.
Coverages included in a typical Basic Form policy are:
  • Fire
  • Lightning
  • Windstorm or Hail
  • Explosion
  • Smoke
  • Vandalism
  • Aircraft or Vehicle Collision
  • Riot or Civil Commotion
  • Sinkhole Collapse
  • Volcanic Activity
Broad Form
Broad Form policies offer more coverage than Basic Form.  They include coverage for all of the same hazards in a Basic Form policy plus several additional hazards which are expressly named.  Like the Basic Form policy, a Broad Form policy covers only named perils.  If the coverage is not specifically listed, it is excluded.  
Coverages included in a typical Broad Form policy are the same as in the Basic Form policy plus the following;
  • Burglary/Break-in damage (THEFT)
  • Falling Objects (Tree’s)
  • Weight of Ice and Snow
  • Freezing of Plumbing
  • Accidental Water Damage
  • Artificially Generated Electricity
Special Form
Special Form coverage is the most comprehensive of the three options.  Note that Special Form policies read differently than a Basic or Broad Form policy.  In a Special Form policy, instead of the document listing what is covered, all perils are covered except for what is specifically excluded in the policy.   
The Special Form policy reads opposite of a Basic or Broad Form policy.  All unlisted perils are covered perils. This can be extremely beneficial to the insured and is the ideal coverage to have.
Common  Special Form Policy Exclusions:
  • Ordinance of Law
  • Earthquake
  • Flood
  • Power Failure
  • Neglect
  • War
  • Nuclear Hazard
  • Intentional Acts
You should carefully read and review the TYPE of policy form with your insurance agent.  Carefully review the covered or excluded perils.  In any property policy, make sure you understand which risks are covered and which are excluded.   Finding out what you do not have coverage for after a claim is never fun.
Many of the excluded coverage’s such as vandalism, theft,  back up of sewer and drains, building ordinance, theft  and loss of income can often times be added on to the Basic, Broad and Special Form policies.  Your agent will be able to tell you if they are available.
If you have other questions don't hesitate to call.
Michael Fillers, CPIA, NFIP
Morris Insurance Agency, LLC
3032 Dauphin Square Connector
Mobile, AL 36607
How I met JESUS in the flesh and HE saved me:

Matt 24:46-47-"Blessed is he whom his master will find at work when he arrives. Truly I tell you, he will put that one in charge of all his possessions."

Michael Fillers Insurance Blog: http://mjfillers.blogspot.com/
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REFERENCE LINKS:: http://www.madisonaveins.com/important-differences-between-basic-broad-and-special-form-coverage

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