What is Basic Form?
Basic Form is a type of insurance policy that offers coverage for a limited set of named perils. It is commonly used in property insurance, including homeowners and commercial policies. This form is the most straightforward policy type, covering specific risks explicitly listed in the policy agreement.
Typically, Basic Form policies include coverage for perils such as fire, lightning, windstorm, hail, explosion, smoke, vandalism, and certain types of theft. However, it excludes coverage for broader or more complex risks, such as water damage from flooding, earthquakes, or general liability claims.
Basic Form is often chosen by property owners seeking an affordable insurance option with no-frills protection. For example, a landlord might use a Basic Form policy to protect a rental property against the most common risks. However, for those seeking more comprehensive protection, a broader form such as Broad Form or Special Form may be more suitable.
This type of policy is particularly useful for individuals or businesses with lower-risk properties or those who do not require extensive coverage due to the property’s use or location.