7 Common Myths About Broad Form Insurance

When it comes to car insurance, it’s easy to get overwhelmed by the options and terminology. One option that often causes confusion is broad form insurance. You may have encountered different perspectives on this type of policy, which can result in misunderstandings and misconceptions.

This post will debunk seven common myths about broad form insurance to help you make a more informed decision. By the end, you’ll have a clearer understanding of what broad form insurance offers, along with its advantages and drawbacks.

Introduction to Broad Form Insurance

Broad form insurance is a specific kind of auto insurance that covers the policyholder rather than a particular vehicle. Unlike traditional auto insurance, which typically requires listing all cars and drivers on the policy, broad form insurance follows the individual policyholders and the automobiles they drive.

This type of coverage is usually limited to liability insurance, meaning it covers damage you cause to others but not damage to your vehicle. Because it only provides basic liability coverage, broad form insurance is an affordable and more desirable option for some drivers.

Debunking Myths About Broad Form Insurance

There are several myths surrounding broad form insurance that can mislead potential policyholders. Understanding the reality behind these myths can help you decide if this type of policy suits your needs.

Myth 1: Multiple Drivers Can Be on a Policy

One common misconception among vehicle owners is that you can add multiple drivers to a broad form auto policy. A broad form auto policy is designed to cover only the named insured, which means that only you, the policyholder, are protected under this type of coverage, regardless of who else might drive your vehicle.

This means if you lend your car to a friend or family member and they get into an accident, neither you nor the other driver will be covered under your broad form policy. This lack of coverage can lead to significant financial liability for both parties involved, as you’ll be responsible for any damages or injuries that occur.

Myth 2: It Is Suitable for All Drivers

Another myth is that broad form insurance is a one-size-fits-all solution for every driver. This is not true. While broad form insurance can be a cost-effective option for single drivers who don’t own multiple vehicles, it might not be the best choice for families, individuals who share their cars, or those with multiple drivers in a household.

It also may not suit drivers with high-value vehicles or those who frequently use their cars for business purposes. Before opting for a broad form auto policy, it’s essential to evaluate your specific needs and circumstances.

Myth 3: It Provides Less Coverage Than Traditional Insurance

Many people think that broad form insurance offers less coverage than traditional car insurance. This isn’t entirely accurate. While broad form insurance primarily covers liability and not comprehensive or collision coverage, it still meets many states’ minimum legal requirements for car insurance. The key difference lies in the type of coverage rather than the amount. Broad form insurance can be a practical option for drivers who don’t own a car but frequently drive different vehicles.

Myth 4: It Provides Comprehensive Coverage

The word “broad” can convey that broad form insurance provides comprehensive coverage beyond basic liability insurance. This is not the case. As we mentioned, broad form insurance excludes other types of coverage, like collision, comprehensive, uninsured motorist, or medical payments.

If you’re looking for a policy covering damage to your vehicle or providing medical coverage, broad form insurance is likely not the right option for you. The extra coverage added to your auto insurance premium can result in higher savings in the future in the event of a severe accident.

Myth 5: It’s Difficult To Obtain

Some drivers believe that getting a broad form insurance policy is a complicated process. In reality, obtaining broad form insurance is relatively straightforward. Many insurance companies offer this type of coverage, and the application process is like that of traditional car insurance.

Start by researching insurance companies that offer this type of policy. Compare quotes and coverage options to find the best fit for your needs. Finally, complete the application process by providing the required information and selecting the appropriate policy limits. Be sure to read the fine print and understand what is and isn’t covered.

Myth 6: High-Risk Drivers Cannot Obtain This Policy

Another misconception we must address is that broad form insurance is suitable only for low-risk drivers. In fact, this type of policy can be an excellent choice for high-risk drivers. Due to their driving history, high-risk drivers often face higher premiums with traditional insurance policies. Broad form insurance offers a more affordable alternative by focusing on the driver rather than the vehicle. This can make it easier for high-risk drivers to obtain the necessary coverage without breaking the bank.

Myth 7: All States Accept This Policy

Unfortunately, broad form auto policies are not permitted in every US state. Broad form insurance is not offered everywhere and is only available in certain states. If you’re considering this type of coverage, checking whether it’s legal and available in your state is crucial. Consulting with an insurance professional can clarify whether broad form insurance is an option where you live. It’s also important to compare it with other coverage types, as location can affect the cost of auto insurance premiums.

The Advantages and Disadvantages of Broad Form Insurance

Broad form insurance has its pros and cons. On the plus side, it is cost-effective and provides essential liability coverage. It is especially beneficial for high-risk drivers and those who frequently drive different vehicles.

However, the drawbacks include its limited coverage. It doesn’t cover passengers or vehicle damage, which means you’ll have to pay out of pocket for repairs or medical expenses in the event of an accident.

Conclusion

Broad form insurance can benefit certain drivers, but it’s essential to understand its limitations and who it’s best suited for. By debunking these common myths, we hope to provide a clearer picture of the typical coverage and process for obtaining this policy. Whether you’re a high-risk driver looking to save on premiums or simply exploring your auto insurance options, knowing the facts will help you make a better decision.

To learn more or to discuss your specific auto insurance needs, contact Serenity Group for the most affordable broad form and SR-22 insurance rates.