Legal Definitions - broad-form insurance

Broad-form insurance refers to an insurance policy that offers a very wide scope of coverage, typically protecting against all risks of loss unless those specific risks are explicitly listed as exclusions within the policy document. This approach is often contrasted with "named perils" policies, which only provide coverage for losses caused by risks that are specifically itemized and named in the policy.

In essence, if a particular risk or cause of loss is not specifically excluded by name in a broad-form policy, it is generally understood to be covered. This provides a more comprehensive level of protection for the policyholder.

• Example 1: Homeowner's Property Damage

  Imagine a homeowner has a broad-form insurance policy for their house. One day, an unusual, localized weather phenomenon, like a sudden microburst of wind, causes a large, healthy tree from a neighbor's yard to fall onto their roof, causing significant structural damage. The homeowner's policy does not contain any specific exclusion for "damage caused by microbursts" or "falling trees from neighbor's property due to unusual weather."

  How it illustrates the term: Because the broad-form policy covers all risks of loss unless specifically excluded, and this particular type of weather event and resulting damage was not listed as an exclusion, the homeowner's insurance claim for the roof repairs would likely be covered. A standard "named perils" policy might only cover damage from specific events like "windstorms" or "hail," and might not explicitly include a microburst or falling tree under those definitions, potentially leaving the homeowner without coverage.

• Example 2: Commercial Business Interruption

  A small manufacturing company has a broad-form business interruption insurance policy. Due to an unexpected, non-malicious software glitch in a regional power grid, their factory experiences a complete power outage for several days, halting production and leading to significant financial losses. The insurance policy does not have an exclusion for "losses due to software glitches in external utility grids."

  How it illustrates the term: Since the broad-form policy covers all causes of business interruption loss unless explicitly excluded, and a power outage caused by an external software glitch was not an exclusion, the company can claim for their lost income and extra expenses during the shutdown. A more restrictive policy might only cover interruptions caused by physical damage to the property (like fire or flood), leaving this unique scenario uncovered.

• Example 3: Personal Valuables Coverage

  An art collector owns a broad-form policy for their valuable collection of antique maps. While the maps are being professionally transported to an exhibition, one of the climate-controlled cases malfunctions, causing condensation to form inside and slightly damaging a rare map. The policy does not contain an exclusion for "damage due to climate control malfunction during transit."

  How it illustrates the term: The broad-form policy covers the antique maps against "all risks" of physical loss or damage unless specifically excluded. Since damage from a climate control malfunction during transit was not an exclusion, the cost of restoration for the damaged map would be covered, providing comprehensive protection beyond just theft or fire.