What is Extended Coverage Insurance?

| December 10, 2012

Extended coverage is an endorsement that when added to a standard property policy it provides additional coverage. You cannot purchase extended coverage as a standalone insurance policy. The best way to understand extended coverage is to start with the standard fire policy to see why extended coverage is needed.

Standard Fire Policy

The standard fire policy is also known as the 165-line policy. Developed in 1943, the standard fire policy is the basis of all property policies in existence today. It was a no-frills policy that offered coverage against basic perils such as fire, lightening and smoke. Any loss occurring from perils other than fire, lightening or smoke were not covered.

Extended Coverages

Extended Coverages, often written as EC, is an endorsement, which broadens the standard fire policy by adding several additional perils. The extended coverage perils are windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, glass breakage, theft and volcanic eruption. Even with the extended coverages, the basic property policy is still restrictive.

Named Perils vs. All Risk

Extended Coverage Endorsement

The standard fire policy plus extended coverages is called a named peril policy. When shopping for the most comprehensive type of property coverage stay away from named peril policies. Instead look for a policy that will cover all risks except for a few excluded perils and conditions. Such policies are appropriately named all risk property policies.

Evolution of the Property Policy

Fortunately much has changed since the inception of the 1943 165-line property policy. Most insurance companies are writing all risk property policies and as such the extended coverages are automatically included in the policy. When shopping for property insurance make sure to ask whether your property policy is written on an all risk were named peril basis.

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Category: Insurance, Property

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Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits About Money.

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