• Skip to primary navigation
  • Skip to main content
  • Skip to footer
JBLB Insurance Group

JBLB Insurance Group

Homeowners Insurance in Platte City, MO

  • HOME
  • ABOUT
  • FAQ
  • BLOG
  • CONTACT
  • START A QUOTE

What Does Your Homeowners Insurance Cover?

By Brandon Tritten

Homeowners insurance is the same everywhere you shop. Find the cheapest price and move on. If your home catches on fire or blows away, you’re protected right? What else do you have to worry about?

There is so much about the paragraph above that is wrong. Price is important until you have claim. To the person who has loss, their insurance becomes real, concrete. Let’s uncover what a homeowners policy protects and the differences in policies. This is the foundation to homeowners insurance. This is your castle for goodness sakes!

Quick Guide

  • What Does Your Homeowners Insurance Cover?
  • What is the Difference Between Basic, Broad, and Special Form?
  • Two Types of Special Form Policies
  • Comparing Basic, Broad, and Special Form [Graph]
  • Buying Back Exclusions
  • Is Special Form the Same as Replacement Cost Coverage?
  • The Long and the Short of It

What Does Your Homeowners Insurance Cover?

You spend more time trying on new shoes than you spend protecting your largest purchase. That’s not your fault. Society puts such an emphasis on saving money that we forget to take time to really understand what we’re buying. Your bank requires you to carry insurance since you have a loan – so you do what is asked, you buy insurance.

The other road block people run into when it comes to their home insurance, they don’t know what to ask. Most people don’t read the booklet their insurance company sends them. I get it, most people don’t geek out on insurance like me. That’s ok. You don’t know what you don’t know. You may have the cheapest insurance policy in town, but what does it cover?

There is a good chance your homeowners insurance policy may not be identical to your neighbors.

Home insurance policies come in 3 types – Basic, Broad, and Special. These are known as Forms. One thing you will find in common with home insurance companies is they all offer at least one if not all of these types of policy Forms. The policy Forms make up your home insurance policy (that thick booklet burried in your basement). These Forms define what is (or isn’t) covered at the time of a loss.

Basic

A Basic Form policy is a named peril policy. In other words, the policy will state what it will cover.

Broad

A Broad Form policy is also a named peril policy. It also states what is covered.

Special

Special Form policies cover all perils unless they are excluded from the policy.

What is a Peril? Merriam-Webster defines it as an “exposure to the risk of being injured, destroyed, or lost.” A Peril is the cause of loss that triggers a claim.

What is the Difference Between Basic, Broad, and Special Form?

The orange box below is a 30,000 foot view of the different types of homeowners insurance policies.

Column two – Dwelling & Other Structures Coverage, is referring to the structure of your home and any structures detached from your home (i.e. garage, shed, fence, gazebo, etc).

Column three – Personal Property Coverage, applies to your personal belongings inside of your home, garage, and shed. This could be your furniture, clothing, dishes, tools, electronics, etc.

Homeowners Form Type

Basic Form | HO-1

Broad Form | HO-2

Special Form | HO-3

Special Form | HO-5

Dwelling & Other Structures Coverage

Basic Form

Broad Form

Special Form

Special Form

Personal Property Coverage

Basic Form

Broad Form

Broad Form

Special Form

Now let’s get a little more granular. Let’s dig a little deeper on the differences between Basic, Broad, and Special Form homeowners insurance policies. Understand, each policy will have its own limitations and exclusions.

Basic Form Homeowners Policy

A Basic Form insurance policy is just that – basic. This type of policy does not have many bells and whistles. If a peril is not listed in the policy, the poilcy does not provide coverage. For coverage to apply, the peril must be listed in the policy. That applies to your home, any detached buildings, and your personal belongings.

Here are the most common coverages you will find in a Basic Form homeowners policy:

  • Fire
  • Lightning
  • Windstorm or hail
  • Explosion
  • Smoke
  • Riot or civil commotion
  • Vandalsim or malicious mischief
  • Vehicles
  • Aircraft
  • Volcanic action
  • Sinkhole collapse

Basic Form policies are also known as an HO-1.

CLAIM EXAMPLE 1
A water pipe in your basement bursts while you’re on vacation causing extensive damage.

  • Basic Form: No coverage
  • Broad Form: Covered
  • Special Form: Covered

Broad Form Homeowners Policy

A Broad Form homeowners policy provides more coverage than a Basic Form policy. A Broad Form policy is also a named peril policy, meaning the peril must be listed in the policy for coverage to apply.

All of the perils in a Basic Form policy are carried over to be included in a Broad Form policy. Plus you’re covered from the following threats in a Broad Form policy:

  • Weight of snow and ice
  • Water damage
  • Falling objects
  • Glass breakage
  • Building collapse
  • Freezing plumbing

Broad Form policies are also known as an HO-2.

CLAIM EXAMPLE 2
It’s pouring rain and the wind is blowing. The wind doesn’t disturb your shingles, but it does blow the rain at just the right angle that it finds its way into your home. Enough water accumulates inside causing significant damage. What type of policy would provide coverage?

  • Basic Form: No coverage
  • Broad Form: No coverage
  • Special Form: Covered

Special Form Homeowners Policy

Special Form homeowners insurance policies are different from Basic and Broad Form. A Special Form protects your home from all perils unless the policy specifically excludes them. So, if your policy doesn’t exlude coverage for said loss, it is covered.

Special Form is the most common type of homeowners policy.

Here are the more common exclusions you will find in a Special Form policy…understand each insurance company may have additional exclusions in their policy.

  • Earthquake
  • Flood
  • Power failure
  • Ordinance or law
  • Government action
  • Intentional acts
  • Nuclear hazard
  • War
  • Neglect

Special Form policies may also be referred to as an HO-3 or an HO-5.

CLAIM EXAMPLE 3
Your child leaves the front door of your home open for a matter of minutes when a random dog runs inside. The dog jumps on your furniture. Gnawing at pillows, tearing couch cushions, knocking over lamps, your TV, and mud everywhere.

  • Basic Form: No coverage
  • Broad Form: No coverage
  • Special Form: Covered

Two Types of Special Form Policies

There are two types of Special Form policies; an HO-3 and HO-5. If you refer to the orange box above, you will notice the coverages for your home are the same (Special Form). The difference is how your contents (i.e. personal belongings) are protected.

An HO-3 will provide Broad Form coverage to your personal property. If you recall from above this is named perils…Only hazards in this section of the policy will cover your belongings.

On the other hand, an HO-5 insures your contents on a Special Form, like the structure of your home. Everything is covered unless it is excluded.

Comparing Basic, Broad, and Special Form

Let’s take a different vantage point and compare the differences between Basic, Broad, and Special Form.

What’s the difference between Basic, Broad, and Special Form?
PERIL
BASIC
BROAD
SPECIAL
Fire
Lightning
Windstorm or Hail
Explosion
Smoke
Riot or Civil Commotion
Vandalism
Aircraft or Vehicles
Sprinkler Leakage
Volcanic action
Sinkhole Collapse
Water Damage
Falling Objects
Weight of Ice or Snow
Glass Breakage
Collapse
Risk of Direct Physical Loss

Buying Back Exclusions

There are some excluded coverages you have the opportunity to buy back.

Earthquake coverage is excluded from most homeowners policies. Generally you will have the ability to buy this coverage back.

This doesn’t apply to all exclusions.

Be sure to ask your insurance agent what extras or enhancements you can add to your policy.

Is Special Form the Same as Replacement Cost Coverage?

No, Special refers to the type of policy. You may have a Basic, Broad, or Special type of home policy. For instance, coverage for fire or lighting would be included in your policy.

What you receive at the time of a loss is based on the valuation method; do you have Replacement Cost or Actual Cash Value as a loss settlement? Replacement Cost refers to the valuation method used at the time of a loss. You will either have Replacement Cost or Actual Cash Value.

Replacement Cost versus Actual Cash Value

Replacement Cost

Billy had a kitchen fire. Once the dust settled it will cost $50,000 to replace his kitchen. Billy has Replacement Cost on his home policy. He has a $2,000 Deductible. Billy will be responsible for the first $2,000 of the loss (i.e. his Deductible). His insurance company will take care of the remaining $48,000.

Actual Cash Value

On the flip side, Actual Cash Value would take the Replacement minus depreciation minus your Deductible.

Here’s how Investopedia explains Actual Cash Value:

“Actual cash value is computed by subtracting depreciation from replacement cost while depreciation is figured by establishing an expected lifetime of an item and determining what percentage of that life remains. This percentage, multiplied by the replacement cost, provides the actual cash value.”

The Long and the Short of It

I wish I could tell you this is black and white, but the reality is we live in a gray world.

There is a constant push and pull between saving money and being protected for the what-ifs life throws at us.

Know, this is an overview – you have to refer back to your policy (or talk with your agent) for specifics.

Another thing to note; Basic and Broad Form policies won’t necessarily be less expensive because they offer less coverage than a Special Form.

Filed Under: Coverage Tagged With: Homeowners Insurance, Personal Property, Property

About Brandon Tritten

When not working, you can catch Brandon running, biking, or watching Cardinals baseball with his wife.

Footer

JBLB Insurance Group

233 Main St
Platte City, MO 64079

  816.858.3000
  Text: 816.312.4420 This phone number will not accept pictures via text message. You may email pictures to tawnya@jblbinsurance.com.
Email Us

What We Do
Discover Platte City
Moving to Platte City
Blog
Get a Proposal

JBLB Insurance Group
  • Facebook
  • Instagram
  • LinkedIn
  • Phone
  • YouTube

Copyright © 2022 · JBLB Insurance Group · Terms & Conditions · Privacy Policy