9.3 Causes of Loss Forms (Basic, Broad, Special)
Key Takeaways
- Commercial property uses three Causes of Loss forms: Basic (CP 10 10), Broad (CP 10 20), and Special (CP 10 30).
- Basic and Broad are named-peril forms; Special is an open-peril (all-risk) form that covers any direct physical loss not excluded.
- Broad adds falling objects, weight of snow/ice/sleet, water damage, and a limited collapse additional coverage to the Basic perils.
- Special shifts the burden of proof to the insurer to show an exclusion applies, which is why it is the broadest and most expensive option.
- Theft is covered only under the Special form; the Basic and Broad named-peril forms do not list theft.
Three Tiers of Peril Coverage
The BPP says what is covered; the Causes of Loss form says which perils trigger payment. ISO offers three, in increasing breadth:
| Form | Number | Type | Burden of Proof |
|---|---|---|---|
| Basic | CP 10 10 | Named peril | Insured proves the peril is listed |
| Broad | CP 10 20 | Named peril | Insured proves the peril is listed |
| Special | CP 10 30 | Open peril (all-risk) | Insurer proves an exclusion applies |
Basic Form Perils (CP 10 10)
Fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. A common memory device is "WCSHAVVERS" plus fire and lightning.
Watch the limits inside these perils. Vandalism does not include theft and excludes loss to glass other than building glass blocks. Sprinkler leakage includes the cost to repair the system if the leak is itself covered. Windstorm excludes interior rain damage unless the wind first creates an opening in the roof or walls; an exam fact pattern where rain enters through an open window with no wind damage is not a covered windstorm loss.
Broad Form Adds (CP 10 20)
The Broad form includes everything in Basic plus falling objects; weight of snow, ice, or sleet; water damage (accidental discharge from a system); and a limited Collapse additional coverage. It does not add theft.
The Collapse additional coverage on the Broad and Special forms is narrow: it covers abrupt collapse caused by specified perils (hidden decay, hidden insect/vermin damage, weight of people or property, defective construction discovered during construction). A building merely in danger of falling down, or one settling or cracking, is not a covered collapse. This precise definition is a favorite exam distinction.
Special Form and the Burden-of-Proof Shift
The Special form (CP 10 30) is open-peril (often called all-risk). Instead of listing covered perils, it covers any direct physical loss unless the loss is specifically excluded or limited. This is the most important conceptual difference on the exam:
- Under named-peril forms (Basic, Broad), the insured must prove the loss was caused by a listed peril.
- Under the Special form, coverage is presumed, so the insurer must prove an exclusion applies to deny the claim.
What Special Adds and Limits
Because it is open-peril, the Special form is the only standard form that covers theft. However, it imposes special limits on theft-prone property: typically $2,500 for furs, jewelry, and watches; $2,500 for stamps, tickets, and letters of credit; and $2,500 for patterns, dies, and molds, with $250 on certain precious-metal and theft-prone categories.
Common Exclusions Across All Forms
Ordinance or law, earth movement (earthquake), governmental action, nuclear hazard, utility services failure, war, water (flood, surface water, sewer backup), and wear and tear. Trap: flood and earthquake are excluded on all three forms and require separate coverage or endorsement.
Two Tiers of Exclusions and Concurrent Causation
The Special form organizes exclusions into two groups, and understanding the difference explains many denied claims.
Group 1 — Anti-Concurrent-Causation Exclusions
Group 1 exclusions apply even if another covered cause contributes to the loss (the anti-concurrent-causation lead-in). These include ordinance or law, earth movement, governmental action, nuclear hazard, utility services, war, and water. If excluded flood water and covered wind both damage a building, the flood portion is still excluded.
Group 2 — Ordinary Exclusions
Group 2 covers more routine perils: wear and tear, rust and corrosion, hidden decay, vermin, settling, and mechanical breakdown. These are excluded but do not carry the anti-concurrent lead-in.
Ensuing Loss
Many Group 2 exclusions contain an ensuing-loss exception: if an excluded cause leads to a separate covered peril, that resulting damage is covered. Example: faulty wiring (excluded) causes a fire (covered) — the fire damage is paid even though the wiring repair is not.
| Concept | Effect |
|---|---|
| Anti-concurrent causation | Loss excluded even if a covered cause also contributes |
| Ensuing loss | Resulting covered peril is paid despite an excluded origin |
| Special limits | Caps on theft-prone property (furs, jewelry, money substitutes) |
Choosing the Right Form
The practical rule producers learn: recommend Special unless cost forces a step down. Special is broadest, simplest to adjust (the insured need not prove cause), and the only form covering theft and many "unnamed" accidents such as a forklift puncturing a wall. Basic is the cheapest and is sometimes mandated by a lender's minimum; Broad is a middle ground that adds the weather and collapse perils most clients worry about.
Worked Trap — Named vs. Open Peril
A warehouse roof leaks after an unexplained failure, soaking stock. Under the Basic or Broad form the insured must point to a listed peril; an unexplained leak that is not windstorm, sprinkler leakage, or accidental discharge is not covered. Under the Special form the same loss is presumed covered unless the insurer proves an exclusion (such as wear and tear). The form choice, not the facts, decides the claim. This is exactly how the exam frames open-peril value.
A merchant suffers a burglary in which thieves break in and steal inventory overnight. Which Causes of Loss form is required for this theft loss to be covered?
Which statement correctly describes the burden of proof under the Special Causes of Loss form?