Everyone wants to save money on their car insurance, and there are many ways to do it. Lower coverage limits, higher deductibles, and discounts are some of the most common ways to save. There's also an option to purchase something called broad form car insurance. But this option is just bare-bones coverage that may leave you significantly underinsured.
An independent insurance agent can help you determine if broad form auto insurance is the right choice for you to save money on your premiums. They'll ensure you get set up with all the coverage you need at the best possible rate. But first, here's a closer look at broad form car insurance and what it covers.
What Is a Broad Form Auto Insurance Policy?
Broad form car insurance offers very limited coverage, typically only the minimum amount of liability car insurance that's legally required in your state, at a low price. There's a catch to this, though.
Basically, broad form auto liability insurance (also called broad form named operator coverage) insures a driver rather than a specific vehicle. It insures only the named operator on cars they own and cars they don’t own but have permission to drive.
This type of coverage is suitable only for drivers who never plan to let anyone else drive their car, even for a short distance. If you have family, a spouse, or anyone else likely to get behind the wheel of your car, broad form auto insurance is likely not the right choice for you.
If you're unsure which type of auto insurance works best for your unique needs, work together with a local independent insurance agent who can advise you.
The Gaps in Broad Form Insurance Coverage
If another driver crashed into your car and you only had broad form auto insurance, you wouldn't have coverage for the damage to your vehicle or any others, but you could still be held legally responsible and required to pay.
But if you crashed your own car, you'd only have coverage for damage to the other driver’s vehicle and their injuries, as well as any injuries to their passengers. If your car got damaged or you got injured, your broad form auto insurance policy would not reimburse you for those costs.
Broad form auto liability insurance might be sufficient for you if you have an older car that wouldn't be worth repairing after an accident. But even under those circumstances, this type of policy has some serious limitations that leave you financially vulnerable. Here are a couple of examples:
- Broad form auto insurance policies provide no comprehensive auto insurance or collision car insurance coverage. You'd have no coverage for your own injuries or damage to your own vehicle. You also wouldn't have protection against theft or vandalism to your vehicle.
- You may not actually save money. If you got into an accident and got sued for damages, your personal assets would be at risk. Buying a more complete auto insurance policy would probably save you money in the long run because you'd have coverage for a wide variety of situations.
- You may not have coverage while driving other vehicles, such as motorcycles, ATVs, and commercial trucks.
Broad form auto insurance may be appealing because it's cheap and meets state minimum coverage requirements, but it can ultimately leave you without the protection you need when a disaster occurs.
Get the Auto Insurance You Really Need
Most states require drivers to have a minimum amount of car insurance that covers bodily injury liability and property damage liability. Broad form auto coverage may not even be legal in many states where the minimum amount of coverage required by law exceeds the simple liability protection available in this type of policy.
Most drivers purchase additional auto insurance coverage depending on their needs. A basic auto insurance policy includes several types of coverage, each subject to certain limits and with a premium amount attached. In order to have sufficient coverage if you have a claim, consider the following auto insurance coverage options:
- Auto liability insurance: Bodily injury liability coverage provides protection if you injure someone else while driving your car by covering their medical expenses and lawsuit costs if you are sued. Property damage liability coverage pays for any physical damage to third-party property you cause, such as another vehicle, a fence, or a tree, and for your legal defense if you are sued.
- Collision coverage: Pays for damage to your car from a collision with another object, regardless of fault.
- Comprehensive coverage: Pays for damage to your car due to a non-collision event such as a flood or theft.
- Uninsured motorist coverage: Protects you if your vehicle is damaged or you are injured by a hit-and-run driver or by a driver who doesn't have auto liability coverage. It takes the place of liability insurance that the other driver should have.
- Underinsured motorist coverage: Protects you if another motorist is at fault for a collision but doesn't have enough insurance to cover your losses.
- Medical payments coverage: This coverage is optional in many states but required in some. It helps to cover medical, dental, and funeral expenses for you or your passengers, regardless of who is at fault.
- Personal injury protection: This covers the cost of medical expenses and lost wages for you and your passengers if you're injured in an accident, regardless of fault.
Many drivers choose additional options that offer convenient coverage. Rental reimbursement coverage, for example, provides for a rental car if your vehicle is damaged by a covered loss. Roadside assistance coverage, or towing and labor coverage, pays for professional assistance if you get locked out of your vehicle, run out of gas, or face another problem while on the road.
Remember, auto insurance policies have deductibles you must pay before your coverage kicks in and reimburses you. If you have both comprehensive and collision coverage, you likely have a deductible that must be met for each.
What States Allow Broad Form Auto Insurance?
Only 11 states allow drivers to buy broad form auto insurance to meet the minimum requirements for coverage. These states include:
- Colorado
- Delaware
- Idaho
- Iowa
- Maryland
- Mississippi
- Nebraska
- Nevada
- Ohio
- Tennessee
- Washington
If you don't reside in any of these states, you'll need to purchase at least the minimum required car insurance liability coverage in your area, as well as any other coverage that may be required by law. An independent insurance agent can help ensure you satisfy your state's car insurance requirements.
5 Ways to Find the Right Auto Insurance Coverage on a Budget
There are many options to save money on car insurance, and some may be a wiser choice for you than broad form auto insurance.
Here are some tips for saving money on your auto insurance:
- Shop around: An independent insurance agent can help you get quotes from multiple insurance carriers to ensure you get the best rates available.
- Bundle your policies: Most insurance companies offer discounts if you purchase more than one policy from them. The more policies you have (e.g., homeowners insurance, car insurance, umbrella insurance, etc.), the greater your discount.
- Maximize discounts: Insurance companies usually offer a wide variety of car insurance discounts, such as savings for multiple policies, safe driving, and good students. Your agent will work with you to ensure you receive any discounts you qualify for.
- Keep a clean driving record: Traffic violations have a negative impact on your insurance rates. Avoiding tickets and accidents helps keep your rates down, and many insurance companies offer additional discounts to those with a clean driving record.
- Choose higher deductibles: Typically, the higher the policy's deductible, the lower the premium. If you think you'll have enough cash to cover your deductible if you have to file a claim, consider a higher deductible to lower your rates.
As always, an independent insurance agent can offer further advice to help you save the most money possible on your car insurance.
The Benefits of Working with an Independent Insurance Agent
All the options for auto insurance can be confusing, and you may not know which is the right choice for you. Independent insurance agents can help simplify this decision for you by recommending only the kind and amount of car insurance you really need. They'll shop and compare policies from multiple insurance companies to make sure you get the best rate, too. And down the road, your agent can help you file car insurance claims and update your coverage when necessary.
Sources
https://www.bankrate.com/insurance/car/broad-form-car-insurance/#broad-form-car-insurance
https://wallethub.com/answers/ci/what-is-broad-form-insurance-2140803079/#:~:text=Broad%20form%20insurance%20is%20only,insurance%20requirements%20and%20nothing%20else.
