Broad Form Insurance

Broad Form Insurance

Homeowners insurance (HO2) policies are structured to provide payment for residence-related damages. Homeowners buy broad form insurance when they desire a lower home insurance premium as it covers less than standard home insurance, special-form (HO3) insurance.

Homeowners use broad-form insurance (HO2) less frequently, as evident in the data; 80% of homes in the U.S. use standard home insurance (HO3).

There are three types of policies: basic, broad, and special-form coverage.

A form assignment is determined by the number of covered perils, property, and liability coverages.

  1. The basic form (HO1) provides the least amount of coverage.
     
  2. Broad form (HO2) extends the range of coverage beyond basic-form insurance.
     
  3. Special form (HO3) includes the most coverage.

We will discuss only broad-form insurance in this article.

What is Broad Form Property Insurance?
A broad form homeowners policy (HO2) is a home insurance policy that covers less than standard home insurance for less money. It is a named perils policy covering only perils listed on the policy's declarations page. Conversely, an HO3 special-form policy covers anything except for risks listed as exclusions.

Open perils vs. named perils are the only difference between a broad-form policy (HO2) and a special-form policy (HO3).

Additionally, broad-form insurance may include protection for bodily injury, some medical bills, and various legal costs.

What Does Broad Form Property Insurance Cover?
Broad form property insurance covers only perils named or listed in the policy. Homeowners can expect their perils coverage to include 16 potential disasters; if not on the list, your policy will not cover it.

Broad Form Perils List
Here is what broad-form property insurance covers:

  1. Lightning
  2. Explosions
  3. Fire
  4. Smoke
  5. Theft
  6. Vandalism
  7. Falling objects, such as a tree
  8. Riot or civil commotion
  9. Windstorm or hail
  10. Aircraft
  11. Accidental discharge and overflow of water
  12. Volcanic eruption
  13. Freezing
  14. Weight of sleet, ice, or snow
  15. Sudden/unintentional damage from electric current
  16. Sudden/accidental tearing, burning, cracking, bulging of built-in appliances (water heaters, HVAC, etc.)

To help you understand the difference in perils covered by policy type, we created this table:

Perils Basic Form HO1 Covered Perils (Named Perils) Broad Form HO2 Covered Perils (Named Perils) Special Form HO3 Covered Perils (Open Perils)
Explosions
Fire
Smoke
Theft
Vandalism
Riot and Civil Commotion
Windstorm and Hail
Aircraft
Lightning
Falling Objects
Accidental Discharge and Overflow of Water  
Volcanic Eruption  
Freezing  
Weight of Snow, Sleet, Ice  
Electrical Current  
Sudden Burning, Tearing of Built-in Appliances (HVAC, etc.)  

What Isn't Covered by Broad Form Insurance?
Broad form coverage only protects against the perils named in the policy. If a specific hazard is not listed, your insurer will not cover it.

Comparatively, special form insurance (HO3) lists only conditions expressly excluded. Therefore, you can presume coverage unless explicitly stated otherwise, including sudden and accidental incidents. Consequently, an HO3 policy tends to be the most popular liability coverage option for homeowners.

Items not protected or specifically listed as excluded from a broad-form (HO2) policy include:

  • Freezing systems while vacant
  • Theft during construction
  • Vandalism during vacancy (60 days or more)
  • Hidden defects, rust, pollution
  • Wear and tear
  • Pests and vermin
  • Government involvement
  • Defective construction, design, and maintenance
  • Enforcement of building codes and similar laws
  • Earthquake
  • Flood and associated water damage
  • Power interruption off-premises
  • Neglect
  • War
  • Nuclear hazard
  • Intentional acts

Broad-Form Property and Liability Coverage
The property and liability protections included by broad form coverage are:

  • Dwelling. Damage to your primary residence is covered at replacement cost value (RCV).
     
  • Other Structures. Free-standing buildings on your property (garages, outhouses, sheds, etc.) are covered at 10% of your dwelling coverage limit with RCV claims calculations.
     
  • Personal Property. Damage resulting from named perils covered at actual cash value (ACV). You choose a coverage limit of 30-70% of your total dwelling coverage. Includes furnishings, appliances, etc., on and off-premises.
     
  • Loss of Use. Living expenses when you move out during any repair period after an incident.
     
  • Personal Liability Insurance. Legal liability coverage for bodily injury and property damage on or off the premises. No deductible coverage between $100,000 - $300,000.
     
  • Medical Payments. Zero-deductible medical coverage up to $5,000 ( e.g., guests get injured on your property and do not sue).

Broad Form Insurance Cost
The cost of a broad form insurance plan will be proportional to the cost to rebuild your house and your deductible. A more expensive home will incur a larger premium payment. However, going with a higher deductible can moderately reduce your HO2 monthly payments.

What Insurance Companies Sell Broad Form Home Insurance?
Most general and property insurance providers offer broad-form insurance coverage. Comparing companies and policies is critical for securing the best protection for your home. Consult with an insurance agent to evaluate the options that best suit your needs.

Insurance Company State Coverage Financial Rating Market Share Known For
Louisiana Citizens Insurance 1 state Fitch A+ <0.1% Louisiana
Lemonade 36 states Demotech A <0.5% Mobile
Lighthouse 4 states AM Best A- <0.5% Coastal
Florida Peninsula / Edison 1 state Demotech A <0.5% Florida
TPC 5 states AM Best A <0.5% Experienced
UPC Insurance 12 states Demotech A 0.83% Coastal
Kingstone 4 states Demotech A <0.5% New York
People's Trust 1 state Demotech A <0.5% Florida
Homeowners of America 5 states Demotech A <0.5% Regional
FedNat / Monarch 1 state Demotech A <0.5% Florida
Pacific Specialty 50 states AM Best A- <0.5% California
Olympus 1 state Demotech A <0.5% Florida
Travelers 50 states AM Best A++ 4.08% Experienced
CA FAIR Plan (fire) 1 state Government <0.5% California
Progressive 50 states AM Best A+ 1.58% Established
Cabrillo Coastal 13 states Demotech A <0.5% Coastal
Liberty Mutual / Safeco 50 states AM Best A 6.48% Experienced
Citizens (hurricane) 1 state Government <0.5% Florida
Farmers / Foremost 50 states AM Best A 5.71% Specialty
Lloyds 50 states AM Best A <0.5% Specialty
Allstate / Encompass 50 states AM Best A+ 8.38% Experienced
Palomar (earthquake) 17 states AM Best A- <0.5% Earthquake
Hippo 32 states AM Best A- <0.5% Digital
Aon Edge (flood) 46 states AM Best A <0.5% Flood
Openly 6 states AM Best A-  <0.5% Digital
Neptune (flood) 39 states AM Best A <0.5% Flood
Nationwide 50 states AM Best A+ 3.12% Experienced
NFIP (flood) 50 states Government <0.5% Flood
State Auto 30 states AM Best A- <0.5% New Tech
Mercury 11 states AM Best A <0.5% California
Tower Hill 14 states AM Best B++ 0.65% Specialty
Plymouth Rock 6 states AM Best A- <0.5% New Tech
Swyfft 7 states AM Best A- <0.5% Digital
Universal P&C 19 states Demotech A 1.17% Experienced
Velocity 6 states AM Best A <0.5% Coastal
Heritage 12 states Demotech A 0.77% Florida
Stillwater 50 states AM Best A- <0.5% Service
American Integrity 1 state Demotech A <0.5% Florida

Get a Broad Form Homeowners Insurance Quote
Click below for more information and a quote on a broad form homeowners insurance policy.

Hope that helps!

Online Broad-Form HO2 Insurance Quote

At your service,
Young Alfred