Basic vs Special Form Insurance Coverage - Resources (2024)

FAQs

What is the difference between basic form and special form coverage? ›

Special form offers the highest and most comprehensive level of coverage of the three or the “platinum level.” It encompasses the perils under basic, broad, and goes beyond. Unlike basic and broad, special form does not limit the perils that are covered; rather, it only lists perils that are excluded.

The broad form covers direct damage to dwellings and personal property on a broad named perils basis. The special form covers direct damage to dwellings and appurtenant structures on an all risks basis while covering personal property on a broad named peril basis.

The Homeowners Policy Basic Form 1 (HO 1) provides basic named perils coverage for direct damage to property, personal liability coverage, and medical payments to others coverage.

The HO-3, also known as a "special form," is the most common homeowners insurance policy form, says the National Association of Insurance Commissioners. An HO-3 offers "open peril" coverage for the structure of your home.

Open Perils in Special Form Coverage

This means that special form insurance offers a more comprehensive level of protection, as it covers a wider range of perils than a named perils policy. Some common exclusions in special form insurance include earthquakes, backup of sewers and drains, and equipment breakdown.

What is not covered by dwelling insurance? A standard homeowners insurance policy typically does not cover floods, earthquakes, sewer backups or damage that occurs from a lack of maintenance. You may be able to buy additional coverage or a separate insurance policy to help cover some of these additional perils.

While different states mandate different types of insurance and there are several additional options (such as gap insurance) available, most basic auto policies consist of: bodily injury liability, personal injury protection, property damage liability, collision, comprehensive and uninsured/underinsured motorist.

An HO2 is often called a “broad form policy,” whereas an HO3 is often called a “special form policy.” HO3 policies cover personal belongings on an “all risks” basis, which means that coverage is provided for all perils except those specifically excluded in the policy.

Coverage A — Dwelling. Coverage B — Other Structures. Coverage C — Personal Property.

Basic Form

It typically covers damage or loss caused by specific perils, such as fire, lightning, windstorm, hail, explosion, and vandalism. This type of coverage is sometimes called “named perils coverage” because it only covers the perils named explicitly in the policy.

What is the basic coverage of a homeowners policy? ›

Home insurance usually covers the structure of your home and your personal belongings, typically covering the cost to repair or rebuild your home after a covered event, such as fire, hurricane, vandalism, or theft. Many policies will also cover detached structures, such as a garage, shed, fence, or gazebo.

Special Perils Coverage provides the most protection for your property. This type of coverage is very different than Basic and Broad Form coverage. Rather than providing protection for perils specifically identified on the policy, Special Form Coverage covers all perils UNLESS they are specifically excluded.

DP-3: Special Form

It is an “open perils” or “all risk” policy, which means real property (dwelling and other structures) will be covered for all types of damage, except exclusions named in the policy.

What it is: HO-3 coverage is the most common type of homeowners insurance. It is also known as special form coverage. Under HO-3 insurance, your home will typically be covered at its replacement cost, while your personal property will be covered up to its actual cash value.

/ˈbeɪs fɔːm/ /ˈbeɪs fɔːrm/ (grammar) ​the basic form of a word to which endings can usually be added, for example wall is the base form of walls and walled. The base form is the form in which words in the dictionary are usually shown.

If you have Replacement Cost Value (RCV) coverage, your policy will pay the cost to repair or replace your damaged property without deducting for depreciation. If you have Actual Cash Value (ACV) coverage, your policy will pay the depreciated cost to repair or replace your damaged property.

Additional Information

This type of coverage is called "time element" insurance because the amount of loss depends on how long it takes to repair or replace the damaged property. The best-known types of time element insurance are business interruption and extra expense coverage.