Limitations with Broad Form Insurance
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What is Broad Form Insurance?
Sometimes called a named operator policy, this is a type of insurance that applies to the driver and not the vehicle. This means the vehicle itself does not have any coverage, but you do when you are behind the wheel.
This form of insurance has been around for a while and offers the type of protection which meets the minimum state requirements. It was designed as a low-cost alternative to conventional insurance because it was recognized by insurance companies that many people had fewer needs or responsibilities as compared to families of which traditional insurance was designed.
Its benefits include not being tied to one vehicle so you can operate more than one off this insurance policy.
Limitations of this Type of Insurance:
Although the advantages of the broad form are considerable, there are also strict limitations on this type of coverage that you’ll need to take into account.
It Covers You, Not the Vehicle: This means that if you loan out your car to someone else, and they cause an accident, they will be held liable for all damages. This could lead to a lawsuit if you are not careful, so you can never loan out your vehicle if you want to avoid this situation.
Secondary Form of Insurance: Although the insurance covers you, it does not supersede the insurance on the car that you have borrowed. For example, if you have borrowed a friend’s car and get involved in an accident, it will be their insurance that covers the damages, not yours because it is secondary in nature. Only if the vehicle itself was not insured does broad form kick in.
Liability Only: The only damage which is covered is what you cause to the other vehicle if you are at fault. Broad form meets the state’s primary requirement for auto insurance so it may include under-insured or uninsured motorist as well. But for the most part, it only provides liability coverage in case of an accident.
Lack of Motorcycle or Company Vehicle Coverage: Broad form does not cover either one of these vehicles which limit you to standard, privately owned cars and trucks.
Who Benefits from Broad Form Car Insurance?
Some people can take advantage of this type of insurance which is well suited for young people who are just starting out or those who live alone.
- Live on a Tight Budget
- Single w/No Family
- Never Lends Vehicle to Anyone Else
If you fit the description, then having this form of insurance may be perfect for your needs. It is less expensive than conventional car insurance, and it provides coverage in case you are the cause of an accident. For many people, broad form insurance may be the best type for their needs.