Broad Form Insurance: A Good Deal or Bad Idea?

Broad form car insurance offers a minimal level of coverage that may not even meet your state’s minimum auto insurance requirements.

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Updated May 13, 2024
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Car insurance could help protect you financially if you get into an accident. Many types of car insurance cover your liability to others up to the limits of the policy. Some types of car insurance also protect the people you have in your car with you.

You’ve probably heard of common coverages such as collision, property, comprehensive, and liability coverage. Another option you may come across when you’re shopping for auto insurance is broad form insurance coverage. This might sound like an attractive option due to the low rates it typically offers. But before you consider it seriously, it’s important to understand how it works.

Here’s what to know about broad form coverage to help you decide whether it’s a good insurance option for you.

In this article

What is broad form insurance?

Broad form insurance, also called broad form named operator insurance, is a type of bare-bones coverage that may offer the benefit of lower car insurance rates. But most states require that you have more auto insurance coverage than broad form provides.

In 2021, broad form insurance can help drivers meet coverage requirements in 11 states, including:

  • Colorado
  • Delaware
  • Idaho
  • Iowa
  • Maryland
  • Mississippi
  • Nebraska
  • Nevada
  • Ohio
  • Tennessee
  • Washington

This type of insurance works in a unique way. Rather than insuring your personal vehicle, it insures you as a motorist. As the named driver on a policy, you’ll get the coverage this type of insurance offers no matter which car you drive. This gives you flexibility if you don’t own a car but want to be an insured driver as required by law. Unfortunately, it could open you up to significant risks because of the things it doesn’t cover.

What types of things does broad form insurance cover?

Generally, broad form insurance pays for damage to property other than the vehicle you’re driving and any injury liability you may have if you injure others. As with any insurance policy, this coverage is extended only to the limits of the policy.

For example, if you have $10,000 in property damage coverage and total someone else’s $25,000 car, you’ll be on the hook for the other $15,000. You’ll likely also have to pay a car insurance deductible, or an amount you’re responsible for paying yourself, before your coverage kicks in.

Unfortunately, this type of coverage only insures your liability and is not full insurance coverage. The coverage does not extend to anyone else in the vehicle with you. For instance, if you get in an accident and a family member requires hospitalization, your insurance provider may not cover bodily injury and medical costs.

Broad form coverage also doesn’t extend to you or the vehicle you’re driving. Your own injuries won’t be covered. Collision coverage is also not included, which means damage to the car you’re driving is your responsibility under this type of auto insurance policy. Similarly, comprehensive coverage, which could protect you financially from things like hitting a deer or hail, isn’t included. If you let someone else drive your car, it won’t be insured under your policy, either.

Who is broad form insurance right for?

Broad form auto insurance could be a good fit for people who only drive by themselves and want to save money on car insurance above everything else. If you ever drive with anyone else in the car, this type of insurance could put you at risk. You might need to pay for damages if you get in an accident and your passenger gets injured.

When considering broad form car insurance, it’s also important to consider the car you’re driving. If you drive an old, low-value car, this type of coverage might be adequate. This is especially true if you can afford to replace the vehicle yourself. Driving a more expensive car or one you don’t own could cause issues if you damage the car and can’t afford to repair it.

Considering your financial situation is also essential. Broad form insurance might open you up to a significant risk of loss. If you have no assets, this may be a minimal risk. However, those with substantial amounts of money saved or invested might put those assets at risk by choosing this form of coverage.

Pros and cons of broad form insurance

Pros of broad form insurance

  • Lower premiums: Broad form coverage often has lower premiums than full coverage car insurance, which typically includes comprehensive, collision, and liability insurance.
  • Could meet minimum insurance requirements: The coverage could meet the minimum insurance requirements in certain states.

Cons of broad form insurance

  • Less coverage: Broad form generally offers much less coverage than a standard policy
  • Might not meet state requirements: This type of policy might not meet the car insurance requirements of your state.
  • Could result in high costs to you: If you get in an accident, you could end up having to pay out of your own pocket to replace your car or pay for injuries to others in your vehicle.

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Is broad form insurance cheap?

Broad form insurance is generally cheaper than standard car insurance. This is because the coverage offered by a broad form insurance policy is generally much less than what’s provided by a standard car insurance policy.

Where is broad form insurance available?

Broad form insurance doesn’t meet the minimum insurance requirements of most states. That said, certain states do allow this coverage. These may include:

  • Colorado
  • Delaware
  • Idaho
  • Iowa
  • Maryland
  • Mississippi
  • Nebraska
  • Nevada
  • Ohio
  • Tennessee
  • Washington

Laws and insurance requirements can change. Check with a licensed insurance agent before purchasing a broad form insurance policy to ensure it meets your state’s minimum insurance requirements.

Is broad form the same as full coverage car insurance?

Broad form insurance is not the same as full coverage car insurance. In fact, it offers limited coverage compared with most car insurance policies. It covers only damages to others and liability to others up to your policy’s limits. It doesn’t protect you financially against damage to your vehicle or cover medical expenses for you or other passengers in your car.

Bottom line

Those wondering how to lower car insurance premiums may have come across broad form car insurance. However, this type of coverage can be risky because it's truly a bare-bones option.

Remember, broad form insurance might not meet your state’s minimum car insurance coverage requirements. If it doesn’t, it likely isn’t an option for you.

Those interested in alternative coverages might consider contacting one of the companies on our list of best car insurance companies. Comparing auto insurance quotes from top providers could help you get the coverage options you need at a cost that works for your budget.

  • You could save up to $600 with some companies
  • Compare dozens of providers in under 5 minutes
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Author Details

Lance Cothern

Lance Cothern, CPA is a personal finance writer and founder of Lance's work covering several personal finance topics has been published in U.S. News & World Report, Business Insider, Credit Karma, Investopedia, and several other publications.