Legal Definitions - broad-form policy

A broad-form policy is a type of insurance policy that provides coverage for a wide range of potential risks or perils, often more extensive than a standard or "named perils" policy. Instead of listing specific events that are covered, a broad-form policy typically covers all risks of loss or damage unless they are specifically excluded in the policy language. This means that if a particular risk is not explicitly mentioned as an exclusion, it is generally covered.

Here are some examples to illustrate how a broad-form policy works:

• Homeowner's Insurance: Imagine a homeowner with a broad-form insurance policy for their house. One day, a rare, unpredicted microburst of wind causes a large, healthy tree to fall onto their roof, causing significant damage. A standard policy might only cover damage from specific named storms or perils like fire, theft, or vandalism. However, because the homeowner has a broad-form policy, and damage from an unusual wind event was not specifically excluded, the insurance company would likely cover the cost of repairs to the roof and the removal of the tree.

• Commercial Property Insurance: A small manufacturing business invests in a broad-form commercial property policy. One morning, a critical piece of machinery experiences an internal electrical malfunction, leading to a complete breakdown and halting production for several days. A basic commercial policy might only cover damage from external events like fire, flood, or theft. However, because the business has a broad-form policy, and internal equipment breakdown was not listed as an exclusion, the policy would likely cover the repair costs for the machinery and potentially the lost income due to business interruption.

• Builder's Risk Insurance: A construction company is building a new multi-story residential complex and secures a broad-form builder's risk policy. During the framing stage, an unexpected and severe hailstorm, which was not a named hurricane or tornado, causes extensive damage to the partially completed structure and stored materials. Since the broad-form policy covers a wide array of risks to the project during construction, and damage from an unlisted severe hailstorm was not specifically excluded, the policy would cover the costs to repair the damaged structure and replace the materials, allowing the project to continue.