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If you are looking for a policy with the cheapest price, your research may lead you to broad form car insurance. This type of auto insurance is relatively inexpensive; however, it only provides minimal liability coverage. Broad form insurance could be a good option in some circumstances, but if you opt for this minimal coverage solution, you should understand this type of policy and its limitations. Bankrate’s insurance editorial team explains broad form car insurance in detail so you can make an informed decision about whether it’s right for you.
Broad form car insurance
A standard personal auto insurance policy generally covers any driver and vehicle listed on the policy declarations page. In contrast, a broad form car insurance policy only provides liability coverage for the named insured while driving a car, regardless of ownership. In most cases, no vehicles are included in the policy since broad form car insurance covers a specific driver rather than a specific vehicle, allowing the policyholder to drive any legally registered vehicle. When a driver borrows a vehicle that is covered on someone else’s insurance policy, their coverage will act as excess.
Availability of broad form car insurance
Broad form car insurance is available in certain states, including 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.
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. For states requiring first-party coverage, such as personal injury protection (PIP) or medical payments, the minimum coverage limit is available as part of the policy coverage.
Compared to other car insurance policies, broad form coverage is incredibly basic. Because of this, it can be a cheap car insurance option. In the United States, the average car insurance premium for a minimum coverage policy is $622 per year. If budget is your primary concern when it comes to auto insurance, broad form coverage might be an option for you. However, most insurance experts recommend purchasing higher liability levels if you can afford to do so to provide you with more financial protection if you cause an accident. Additionally, liability-only insurance does not cover damage to the vehicle you are driving should you be at fault in an accident.
What broad form car insurance does not cover
Aside from states that require medical payments or PIP coverage, broad form car insurance does not provide coverage for the medical expenses of your or your passengers. Unlike other auto insurance policies, you do not have the option to add endorsements such as additional liability coverage, comprehensive coverage, collision coverage, rental coverage or roadside assistance.
Broad form car insurance also does not cover any other driver to drive your vehicle. If you are the listed driver and you loan your vehicle to a friend, the liability coverage you purchased will not provide coverage if your friend causes an accident. However, if you are the owner of that vehicle, you will still be financially liable for any damage caused.
Advantages and disadvantages of broad form auto insurance
With any auto insurance option, there are benefits as well as drawbacks. Being aware of the advantages and disadvantages of your policy type can help you to make more informed decisions when choosing auto insurance coverage.
Broad form insurance is not the appropriate type of auto insurance coverage for everyone, but there are certain situations where it could be the best option. Some advantages of broad form coverage are:
- 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, you might be considered a high-risk driver. Since you may pay significantly more for insurance and could run into eligibility restrictions with some insurance carriers, broad form insurance could be an option.
- It provides at least a minimum level of 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.
Most insurance experts recommend that you purchase higher liability limits, if possible, for a greater level of financial protection. Talking to your insurance company may help you find discounts that could create room in your budget to purchase higher levels of liability coverage or even full coverage.
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 offer coverage for anyone else to drive your car, for your own injuries or injuries to passengers (unless your state requires that type of coverage) or for damages to your own vehicle.
- Limited availability: This type of auto insurance is only available in 11 states. Because it does not provide much coverage, not all insurance companies offer broad form car insurance. 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: A broad form alternative
Although broad form car insurance is affordable, it is not widely available and not the right choice for all drivers. Non-owner insurance or NNO, is an alternative available in every state and with most car insurance companies. Similar to broad form insurance, non-owner insurance follows the driver and is not tied to a particular vehicle. It can be more affordable than standard coverage since comprehensive and collision coverage are not an option. Non-owner coverage may be a good option for you if:
- You sold your last vehicle and plan on buying a new car soon. Some insurance companies allow policyholders to keep their insurance policies open with a non-owner policy while in between vehicles to maintain discounts and avoid a lapse of coverage.
- You rent or borrow vehicles frequently but do not own a vehicle.
- Do not live with someone who has a vehicle. A key stipulation to a non-owner policy is for the policyholder not to have regular access to a vehicle. If you live with someone who owns a car, you may be added to their policy as an occasional operator.
- When you rent or borrow a vehicle, you tend to have passengers or want higher levels of liability coverage.
It can be hard to understand what the different types of car insurance will and won’t cover. Below is a chart to help you compare what coverage common types of car insurance have available vs. broad form insurance.
|State minimum liability||✔||✔||✔||✔|
|Optional higher liability limits||✘||✔||✔||✔|
|PIP/Med pay coverage||When required by the state||✔||✔||✔|
|Uninsured motorist coverage||When required by the state||✔||✔||✔|
|Acts as excess coverage?||✔||✔||✔||✔|
|Who is covered?||Named insured only||Named insured and co-insured||Named insured, listed drivers and *occasional operators||Named insured, listed drivers and *occasional operators|
Broad form insurance may be a good choice for drivers who do not own a car, own a car that does not benefit from comprehensive or collision coverage, do not have passengers and do not require higher liability coverage limits, and have health insurance that will pay for their injuries if they are involved in an at-fault accident. Most drivers do not fall into this category. If you find yourself looking for a bare-bones policy, a non-owner policy could be a strong option that typically has low rates, often has the option for an SR-22 filing and can offer you and your passengers more protection. Speaking with a licensed insurance professional who understands your financial needs and limitations can help you with this decision.
Frequently asked questions
Broad form coverage is only available for private passenger vehicles. Motorcycles, motorhomes, RV, boats, and other modes of transportation that may need insurance do not qualify for a broad form policy.
Broad form policies are available for commercial purposes, such as dealerships or businesses with fleets of vehicles, but only from commercial insurance carriers. In this situation, employees are covered to drive any car under the company’s broad form policy, and these types of policies can include additional coverage for collision, medical payments and higher limits of liability. However, broad form policies for private passenger vehicles do not offer coverage for commercial or business use.
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.
Broad form insurance does not usually allow you to add optional coverages. 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 these additional coverages.