In terms of property coverage, there are three causes of loss forms available for landlord insurance policies: Basic, Broad, and Special. The differences in the perils covered within each of these forms can be confusing; it is imperative to understand which forms cover what perils in order to ensure that you have the right coverage for your property. This way, you can better position yourself to avoid costly out-of-pocket expenses in the event of a loss.
What is a “peril” in insurance terms?
A peril is a specific cause of loss. Some examples of perils are fire, windstorm, vandalism, theft and water damage. Understanding how these perils are covered (or not covered) will help policyholders make better decisions in selecting which form they wish to purchase in their insurance policy.
Insurers consider the probability of which insureds will be affected by which perils when approving coverage forms and setting insurance premiums. In addition to probability, they consider how frequently and how severely an insured may be affected by various perils. Different forms cover different perils allowing individuals and businesses to tailor their insurance policies to protect against various risks. Selecting which Causes of Loss Form to purchase is the foundation of your property insurance plan as it provides financial security against unforeseen events that could affect your rental property.
Basic Form Insurance Coverage
Basic Form coverage provides a fundamental level of protection against a limited number of perils. This coverage form offers protection against fire, smoke, lightning, explosion, windstorm, hail, riot or civil commotion, sprinkler leakage, aircraft or vehicle collision, vandalism, sinkhole collapse, and volcanic action.
It is important to note that any perils not explicitly listed in the policy are excluded under the Basic Form. As a result, policyholders opting for Basic Form coverage may find themselves exposed to significant risk if they encounter an event not specifically covered under the policy. Basic Form insurance is typically chosen when cost is the primary concern; Basic Form coverage tends to have a lower premium than Broad Form or Special Form coverage.
Broad Form Insurance Coverage
Broad Form coverage is essentially Basic Form coverage with a little kick! It covers all of the perils covered in the Basic Form PLUS the following additional perils: falling objects, water damage (occurring as a result of breaking apart or tearing of any plumbing, heating, or air conditioning systems or other appliances) and weight of ice, snow or sleet.
Special Form Insurance Coverage
Special Form coverage, also known as all-risk or open-peril coverage, offers the highest level of protection out of the three causes of loss forms. Unlike Basic and Broad Form coverage, which specify the covered perils, Special Form coverage adopts a broader strategy by including coverage for all risks except those explicitly excluded in the form.
With Special Form coverage, policyholders have extensive protection against a vast array of perils, ranging from basic causes of loss like fire or theft to special losses such as ice-damming or an employee accidentally driving a vehicle into the side of the building (as basic and broad form exclude vehicular collision by an employee of the insured). The Special Form’s comprehensive approach towards coverage minimizes the risk of encountering coverage gaps, providing a sense of security even in complex or ambiguous situations, and although Special Form coverage tends to carry a higher premium than both basic and broad form options, it offers additional peace of mind, especially for valuable assets or properties with unique risk profiles.
Why we chose to only offer Special Form Insurance Coverage at Honeycomb
At Honeycomb, we are committed to providing comprehensive protection for our insureds; that is why we exclusively offer Special Form coverage. We understand that protecting your property investments is extremely important, and we strive to offer a level of security that goes above and beyond the norm.
By choosing Special Form coverage, our insureds benefit from a comprehensive safety net that covers a vast array of perils. This ensures that our policyholders enjoy peace of mind in knowing they are safeguarded against not only common risks but also unexpected or rare occurrences. With Special Form coverage, our clients can face uncertainties with confidence, knowing that their valuable assets and properties are shielded against a wide range of potential threats.
It's important to note that protection against certain perils are not offered in any of these forms; some coverages such as back-up of sewers and drains, electrical damage due to artificially generated power surges or other forms of equipment breakdown are not included causes of loss under the Basic, Broad or Special Forms. Honeycomb Insurance offers these coverages as available add-ons to further tailor your commercial package policy and to better prepare you for the unknown. Let us handle the risk so you can focus on the things that matter.
