How Special Personal Property Form Works

During the purchase of property insurance for your home or investment property, you will meet with typically three different levels of coverage: basic, broad, and special. Each represents a different level of coverage you can have, as stated on the declarations page of your insurance policy. The distinction between these coverage forms is frequently confused by property owners, and the misunderstanding on this topic can lead to large or unprecedented gaps in coverage. The most restrictive coverage is the basic form, while the special form offers a greater level of protection.

Special form coverage, also referred to as special personal property form of coverage, is the most thorough and effective of the three options. The special form policy can be very beneficial to the insured party, and it is the best coverage to have. The policy does not grant coverage to every peril, so reviewing all the exclusions is critical. Your agent should list the aspects of your coverage before you sign the insurance proposal or application binding your policy.

Insurances often add several exclusions to the policy via an endorsement. They do not specifically list the perils in the special personal property form policy, rather, it is an "all-risk" coverage unless expressly excluded. Sometimes, the insurance company leaves out several coverages, such as backup of sewer and drains. For the ordinance of the law, theft and income loss are often inclusive in the broad and special form policies.

Example of Special Personal Property Form

Under named-peril coverage (basic form and broad form), the policyholder has the task of proving that a listed peril caused a loss. However, with a special personal property form coverage, the burden is on the insurance company. The insurance firm can only deny the claim if the source of loss is excluded and, therefore, ineligible for coverage. Here are some claim examples of perils that would be covered by the special form but would be denied coverage by the named peril forms (basic form and broad form).

  • After his dad leaves a hammer lying around, a toddler finds it and goes on a rampage through his parent's house, seriously destroying several parts of the house such as the plaster walls, a toilet bowl, sink, dressing table, and other objects.
  • A stay-at-home mother tries remodelling her 2-story home. Accidentally, an open paint bucket gets dropped down the stairs well while she is painting the upstairs. The dropped paint bucket causes damage to the floors, walls, and furniture.
  • An insured couple were walking on the floor rafts of their unfinished attic. They both slip off the rafts and fall through the living room ceiling, causing extensive damage.
  • Damian leaves a battery on a hardwood floor. The acid inside the battery leaks out and spreads to the point that it was necessary to replace a large portion of the floor.

In each of these instances, the special personal property form of coverage would take care of the claimed loss without needing to prove the cause of the loss was by a listed peril. Special personal property form coverage offers more coverage while also making the claims process easier.

Significance of Special Personal Property Form

In a special personal property form policy, instead of the policy listing what it covers, it provides coverage for all perils except what they exclude in the policy. While this policy type provides the greatest level of protection, you should choose your kind of protection by considering all options. Any type of policy form you choose should be carefully read and reviewed with your insurance agent. With any property policy, you should know the risks, inclusive and exclusive, and the benefits.