When it comes to homeowners’ policies, there are three different coverage forms available: basic, broad and special. But what are the differences? And how do these differences play out in real-world claims scenarios? It is important to begin with understandings perils. A peril is a specific risk or cause of loss covered by a homeowner’s insurance policy.

BASIC FORM

While rarely purchased, the basic peril is the least comprehensive of the three forms. A basic peril coverage form reimburses for:

• Fire or Lightning
• Windstorm or Hail
• Explosion
• Smoke
• Vandalism
• Theft
• Aircraft
• Vehicle
• Riot or Civil Commotion
• Volcanic Activity

Policies do always have exclusions that apply. For example, the Falling Objects peril further states: This peril does not include loss to property contained in a building unless the roof or an outside wall of the building is first damaged by a falling object. Damage to the falling object itself is not included. 

BROAD FORM

The second coverage form is broad perils. This is the most commonly used homeowners form for personal property coverage. The broad form is similar to basic with the addition of the following covered perils:

• Falling Objects
• Weight of Ice and Snow
• Accidental Discharge Or Overflow Of Water Or Steam (Plumbing, HVAC, appliance)
  • Ex. Pipes break due to excessive pressure or corrosion
• Sudden And Accidental Tearing Apart, Cracking, Burning Or Bulging (Appliances)
  • Ex. Water heater cracks and water escapes
• Freezing of Plumbing
• Artificially Generated Electricity
  • Ex. Power failure, surge from power line

These are a little less straight forward and do not occur as often as the perils covered under the basic perils coverage form. If you suffer damage caused by one of these perils and it is not excluded elsewhere in the policy, your insurance policy will provide coverage.

SPECIAL FORM

The last form, special or open perils, provides the broadest coverage.The form typically reads something like:

We cover risk of accidental direct physical loss to covered property described under Coverage A - Dwelling and Coverage B - Other Structures except for losses excluded elsewhere in this policy.

On the previous coverage forms, it is the insured’s responsibility to show that the loss was caused by one of the covered perils.The special form shifts the burden to the insurance company to prove that the loss is not covered by the policy.  This is a subtle difference that provides a huge benefit: If the insurance company cannot determine with certainty what the cause of loss was, they have to cover it. This can give you a much broader interpretation of coverage when any ambiguity is involved.

What are a few examples of losses covered by a special form that wouldn’t be covered by a basic or broad form?

• A deer smashes through a window in your home (or even walks through an open door!) and panics causing damage to furniture, electronics and walls. Broad form does not include animals as a peril. Special form only excludes birds, vermin, rodents or insects so there is coverage!
• The Broad form covers damage CAUSED by a falling object but not the falling object itself. For example, you have an ornate chandelier that falls and damages your table. The Broad form would cover the table. Special form would cover the chandelier and table.
• You are painting the ceiling of your home and drop the paint which spills on a couch and then the carpet. Broad form would cover the damage of the paint can hitting an object but not the damage caused by the paint. Special form would cover both.
• You are doing some work in the attic when you misstep and fall through the ceiling and land on the entertainment center which breaks along with the electronics, DVD’s and games in the entertainment center. Broad form would not cover anything. Special form would cover everything but your injuries!
• Your child decides they want to help with some home repair and grabs a hammer and proceeds to damage your cabinets, windows and some electronics for good measure! Broad form would not cover any damages. Special form would cover all of these damages.

This is certainly not an exhaustive list but provides a few examples of the benefits of the special coverage form.

What coverage do you have?  Most HO3 policies – the most standard homeowners policy – provides special perils coverage for Coverage A – Building and Coverage B – Other Structures.  However, Coverage C – Personal Property is typically covered on a broad form basis.  You can purchase an endorsement that will give you special form coverage for Coverage C – Personal Property. If you want the best and broadest coverage that provides more coverage for any uncertain circumstances, you should purchase the Special Perils coverage form.

If you are still unsure of what coverage is the best for you, please contact our office and we would be more than happy to discuss your options. We are here to help you make an informative decision about what insurance coverage is right for your family.