You are meeting with your insurance agent and it is mentioned your insurance policy includes special form insurance coverage. You are probably thinking well that sounds great, but deep down you are actually wondering what the heck does that means?
Let’s make this easier to understand!
Your home or business insurance policy will likely include one of 3 coverage form options:
- Basic Form
- Broad Form
- Special Form
What is the difference?
This is an important question to ask as they vary greatly between each option.
The main difference between the coverage forms is fairly simple. The basic and broad form options are “named peril” coverage forms. This means that they specifically list what coverage perils apply to the policy. Unlike the named peril coverage forms, special form coverage is also known as “open peril” or “all risk” coverage. It essentially means everything is covered except what is listed as an exclusion. Overall, this is much broader than the named peril forms. In the situation of a claim, it can be the difference between a paid claim, putting thousands of dollars back in your pocket, and a denied claim. We will touch on the importance of having special form coverage on your home, business, and personal property.
Examples of Special Form Coverage
Let’s discuss some claims examples of what coverage would be with the special form, but would be denied by the named peril forms.
- A homeowner is remodeling their 2-story home. While painting the upstairs banister, the open 5-gallon paint bucket accidentally gets dropped down the stair well causing damage to the floor, walls, and furniture. Under the special dwelling and personal property form coverage, it would apply here and pay for the loss.
- A teenager gets into a spat with his parents and goes on a rampage with a hammer, heavily damaging drywall, the toilets, and counter tops. The special form coverage would pay for the damages.
- A white-tailed deer sees its reflection in the front window of a retail clothing shop on the outskirts of town. It proceeds to run directly into the glass and enters the business, causing extensive damage to the building, the office furniture and its inventory. The special form would apply and pay for damages.
- A homeowner is doing a load of laundry. After loading the washer, the homeowner leaves the laundry room. The washer becomes unbalanced during the spin cycle and falls off of its stand. Damages to the door and a hole in the wall will need repaired. The special form would afford coverage for the claim loss.
These are just a few examples and every insurance policy is different. Talk to an independent insurance professional, like us, to discuss your options and make sure you are properly covered. These types of things can (and do) happen. We have seen it!
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This is written from an insurance professional’s perspective and shouldn’t be taken for legal or coverage advice.