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Broad form auto insurance

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    Article Highlights

    Broad form insurance (BFI) might sound like it provides extensive coverage to the insured, but it actually is the opposite: in some ways, it provides minimal coverage.  It can save the insured a lot of money, but it can also be financially devastating if you are in an accident and are underinsured.  Comparing the advantages and disadvantages of broad form insurance to limited and standard insurance can help you decide if broad form insurance might be right for you.

    What is broad form insurance?

    Broad form insurance is insurance that provides “bare-bones” coverage at a low premium rate. It is typically thought to be extensive coverage because of the name “broad”, but in actuality is very narrow coverage. It can serve to cover the minimum liability insurance required by state laws. Broad form insurance is intended to be supplemental because there is so much it does not cover and it cannot be augmented with additional policies such as comprehensive and collision.        

    What does it cover?

    Broad form insurance only covers minimum liability insurance for one driver. To qualify for a claim payout under broad form insurance, no one else can be driving the vehicle at the time of the accident, and it only covers damages to your own car. 

    Broad form vs limited or standard insurance

    When comparing broad form insurance to limited and standard insurance, insurance companies look at the nature of the accident to determine if you are more or less than 50% at fault, in order to determine if you will have to pay your deductible (or not), and to determine if (and how much) they will pay on your claim.  

    Standard

    Standard insurance usually costs more, but it also covers more; a higher premium typically reflects better coverage. Standard insurance commonly includes comprehensive, collision, uninsured or underinsured motorist coverage, and sometimes includes personal injury protection, rental car coverage and roadside assistance. With a standard insurance policy, whether you are at fault or not in an accident, you are covered but you must pay a deductible.  

    Broad form

    Broad form insurance does not cover non-collision damages (such as theft, vandalism, acts of nature and weather), collision, personal injury, uninsured or underinsured motorist and others driving your vehicle. Broad form insurance is less expensive because it offers less coverage than other policies. However, if you end up in an accident that is not covered and have to pay expensive out of pocket costs, then having less coverage (that is cheaper) actually ends up being more expensive in the long run. With a broad form insurance policy, if you are not at fault, then you are covered and you do not have to pay a deductible. If you are at fault, you are still covered, but you must then pay the deductible. 

    Limited

    With a limited insurance policy, if you are at fault in an accident, then your insurance pays nothing. This is what makes limited collision insurance so much cheaper than standard insurance. If you are not at fault, then you are covered, but must pay a deductible.  

    Other coverages

    Other types of auto insurance that are available (in addition to broad form coverage — or in place of) and provide more coverage include:

    • Comprehensive – covers non-collision damages such as theft, vandalism, acts of nature and weather
    • Collision – covers damages caused by another vehicle or object
    • Personal injury protection – covers medical costs for your own injuries
    • Uninsured or underinsured motorist – covers costs for damages in an accident with an uninsured or underinsured driver
    • Others driving your vehicle – covers damages while someone else is driving your car
    • Roadside assistance – pays for assistance, towing and labor
    • Rental car reimbursement – pays for a rental car while your car is being repaired

    Is broad form insurance right for me?

    To determine if broad form insurance is right for you, compare the pros and cons below. First, determine if broad form insurance is allowed in your state. BFI is only allowed in the following 11 states: Colorado, Delaware, Idaho, Iowa, Maryland, Mississippi, Nebraska, Nevada, Ohio, Tennessee and Washington. BFI might be right for you if you are a driver who owns an older or low-value car, seeks minimal liability coverage, has financial resources to pay out of pocket for losses, does not own a vehicle, drives a car you do not own, never drives with passengers or is covered under another standard policy. 

    ProsCons
    Low costLimited states who allow it / offer it
    Fulfills state requirement for minimum liability auto insurance requirementGaping holes in coverage
    Only covers one driver
    Minimal liability coverage
    Cannot add on comprehensive or collision

    High risk for expensive out of pocket costs

    The takeaway

    The term broad form insurance is sometimes misleading to consumers in thinking it is broad coverage when it is really quite limited in scope. When obtaining such coverage, the insured must determine if the risks associated with having limited coverage is worth the cost associated with having to pay out of pocket in the event of an accident that is not covered. Broad form insurance might be right for one customer, but not for another, so it is important to discuss this type of coverage with your agent.

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