Broad Form Car Insurance | Bankrate

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Broad form car insurance could be a viable option if you have limited resources, but need an affordable auto insurance policy. It covers you, the driver, specifically, and offers enough coverage to meet the minimum liability requirements in your state and avoid costly fines and penalties. However, this type of policy could turn out to be inadequate if you’re involved in a serious accident.

Before purchasing a broad form insurance policy, understand how it works, key benefits and what coverages are excluded to make an informed decision.

Broad form car insurance

When you purchase a standard personal auto insurance policy, coverage extends to the drivers and vehicles listed on the policy declarations page. However, with broad form car insurance, the coverage follows the policyholder, regardless of who owns the vehicle.

These policies typically exclude vehicles, so you could drive any vehicle that’s legally registered. It’s also important to note that broad form car insurance generally only includes liability coverage for the insured party and does not offer additional coverages like collision and comprehensive.

Availability of broad form car insurance

Broad form car insurance isn’t an option in all 50 states or Washington, D.C. You can only opt for this form of coverage in Colorado, Delaware, Idaho, Iowa, Maryland, Mississippi, Nebraska, Nevada, Ohio, Tennessee and Washington.

Since this is not a standard type of car insurance, it is not available with every provider that writes coverage in these 11 states. Insurance companies that specialize in high-risk or nonstandard insurance, like Bristol West or Dairyland, are more likely to offer this coverage over standard providers like major national brands.

What does broad form car insurance cover?

Generally, the only coverage offered with broad form car insurance is liability insurance, and the coverage amount is only enough to satisfy your state’s minimum requirements. This can include personal injury protection (PIP) in states requiring first-party coverage.

What broad form car insurance does not cover

The following coverages are typically excluded from a broad form policy if they are not mandated under state law:

Furthermore, you don’t have the option to add endorsements such as additional liability coverage, rental coverage reimbursement or roadside assistance. This means vehicle damage or theft isn’t covered, and neither are medical expenses associated with an accident.

These policies do not cover additional drivers, even if you own the vehicle. So, your vehicle won’t be covered if you loan it to a friend and they are involved in an accident. In this scenario, if you are the owner of that vehicle, you will still be financially liable for any damage caused.

Consequently, most insurance experts recommend purchasing a traditional auto policy if you can afford to do so to provide you with more financial protection if you cause an accident.

Advantages and disadvantages of broad form auto insurance

As with any car insurance policy, there are benefits and drawbacks to consider before purchasing coverage.

• Advantages of broad form auto insurance
  

  Broad form insurance could be an ideal form of coverage for some. Here are some key advantages to keep in mind as you shop around for coverage:

  • It is inexpensive: Broad form policies are often less expensive than other policies because there is very little coverage provided.
  • It may be an option for high-risk drivers: If you have multiple incidents on your driving record such as moving violations, DUIS and at-fault accidents, you might be considered a high-risk driver. Since you may pay significantly more for insurance and could run into eligibility restrictions with some standard auto insurers, broad form insurance could be an option.
  • It provides the state-mandated liability coverage: If your budget is particularly tight, broad form car insurance could be a solution. Even though the coverage is extremely limited, it can help you satisfy your state’s insurance requirements and will provide at least some coverage in the event of an accident.
  • It provides excess coverage: In a situation where the driver rents or borrows a vehicle that is listed on an active insurance policy and an at-fault accident occurs, the broad form policy will kick in as secondary coverage. It will pay out up to the policy limits for liability coverage, but will not provide additional coverage that the broad policy doesn’t have, such as collision and comprehensive coverage.

• Disadvantages of broad form auto insurance
  

  Because the coverage is so limited, most insurance experts do not recommend broad form car insurance coverage. Before purchasing broad form coverage, you may want to consider the following drawbacks:

  • Lack of coverage: Broad form auto insurance does not extend coverage to anyone who drives your car, your own injuries or injuries to passengers (unless your state requires that type of coverage) or for damages to your vehicle.
  • Limited availability: This type of auto insurance is only available in 11 states. Because it isn’t a standard car insurance option, broad form car insurance won’t be available from every carrier in the states where it is offered. If this is a policy type that you want to purchase, you may need to request quotes from numerous companies to find one that offers broad form coverage.
  • Potential financial devastation: If you have broad form insurance and you cause an accident, you will be responsible for any expenses that exceed the limits of your policy. If the accident is severe, this could lead to financial devastation.

Non-owner insurance: an alternative to broad form car insurance

If you live in a state where broad form insurance isn’t offered or if you prefer to purchase a more comprehensive policy, consider non-owner insurance or NNO, Like broad form coverage, the policy is tied to the driver instead of the vehicle, and the premiums are more affordable compared to standard car insurance.

Some instances where non-owner insurance could be ideal for your situation include:

• You recently sold your vehicle and plan to buy a new one soon. Some insurance companies let policyholders maintain a non-owner policy while in between vehicles to avoid a lapse of coverage and maintain rate discounts.
• You do not own a vehicle, but rely on rental cars or vehicles belonging to friends or family for transportation.
• No one in your home owns a vehicle. A key stipulation in non-owner policies is that the policyholder doesn’t have regular access to the vehicle. If you live with someone who owns a car, you may be added to their policy as an occasional operator.
• You frequently rent or borrow vehicles, and you prefer higher liability limits to provide more financial protection for the passengers in your vehicle.

How broad form car insurance differs from other types of coverage

It can be hard to understand what different types of car insurance will and won’t cover. The chart below can help you compare what coverage common types of car insurance offer vs. broad form insurance.

Bottom line

Broad form insurance could be a good option for you if you do not own a car (or own an older car that wouldn’t require collision or comprehensive coverage), or rarely carry passengers. That said, insurance experts generally recommend purchasing a standard car insurance policy if able for more well-rounded financial protection for you and your vehicle.

It’s worth speaking with your auto insurance provider to explore alternatives that could be available to you. Your agent can help you find eligible discounts that could create room in your budget to purchase higher levels of liability coverage or even full coverage.

Frequently asked questions

• Is broad form coverage available for other types of vehicles?
  

  No, broad form car insurance only extends to private passenger vehicles in states where this coverage is permitted. Motorcycles, motorhomes, RV and other modes of transportation that may need insurance typically do not qualify for a broad form policy.

• Does broad form insurance cover commercial vehicles or business use?
  

  Broad form policies are available for commercial purposes, such as dealerships or businesses with fleets of vehicles, but only from commercial insurance carriers. The policies cover employees operating company vehicles, and some providers permit the purchase of add-on coverages, like collision, medical payments and higher liability limits. However, broad form policies purchased for drivers of private passenger vehicles do not extend to vehicles operated for commercial or business purposes.

• Will broad form coverage cover my passengers?
  

  No, coverage will not extend to passengers. A broad form policy only provides liability coverage for the driver listed on the policy. To get coverage for injuries to you or your passengers, you must purchase medical payments coverage or personal injury protection (PIP), depending on the state you live in, which would convert the policy into a non-owner policy instead of a broad form. Only in states where the state requires medical payments or PIP is it included in a broad form policy. Otherwise, you’ll need to opt for a different type of policy to get the supplemental protection you need.

• Can I add certain coverages to my broad form policy?
  

  Broad form insurance does not usually allow you to add optional coverage types. However, there are car insurance options that allow you to purchase higher liability limits and optional coverage types like comprehensive and collision. Finding a cheap auto insurance company and taking advantage of discounts can help to keep your premium lower so that you can afford to purchase additional coverage.

  Be sure to consult with your insurance agent to determine the best option for your situation.