9.3 Causes of Loss Forms (Basic, Broad, Special)

Choosing the Perils: CP 10 10, CP 10 20, CP 10 30

A commercial property coverage form says what property is covered; a causes of loss form says which perils trigger payment. ISO publishes three, plus an Earthquake form:

• Basic Form (CP 10 10) — named perils, the narrowest.
• Broad Form (CP 10 20) — Basic perils plus additional named perils and limited coverages.
• Special Form (CP 10 30) — "open peril" / all-risk; covers all direct physical loss except what is excluded.

The Basic Form covers eleven named perils, often recalled by the memory aid "WC SHAVERS" plus volcanic action: Fire, Lightning, Explosion, Windstorm or hail, Smoke, Aircraft or vehicles, Riot or civil commotion, Vandalism, Sprinkler leakage, Sinkhole collapse, and Volcanic action. Note that the Basic Form does not cover theft.

Broad Form Additions and the Special Form

The Broad Form (CP 10 20) adds to the Basic perils:

• Falling objects
• Weight of snow, ice, or sleet
• Water damage (accidental discharge/leakage from a system, but not flood)
• A Collapse additional coverage for specified causes (e.g., hidden decay, vermin, weight of people/property).

The Special Form (CP 10 30) flips the logic: everything is covered unless excluded, so the burden shifts to the insurer to prove an exclusion applies. It also adds theft coverage (subject to sublimits on certain property like furs and jewelry). Special Form excludes, among others: ordinance or law, earth movement, governmental action, nuclear hazard, utility service failure, war, water (flood/sewer backup), wear and tear, and certain consequential and pollution losses.

Exam tip: On a named-peril form the insured must prove the loss was caused by a listed peril; on the Special open-peril form the insurer must prove an exclusion. This burden-of-proof shift is a favorite question.

Comparison Table and Common Traps

Traps to remember: (1) Flood and earthquake are excluded on ALL three forms; they require separate flood and earthquake (CP 10 40) coverage. (2) Theft appears only on the Special Form. (3) "Open peril" is the modern term; "all-risk" is older but means the same thing. (4) Glass breakage is covered as part of the building under Special; under Basic/Broad it ties to vandalism or another named peril.

Special Form Sublimits and the Anti-Concurrent-Causation Wording

Even though the Special Form is the broadest, several sublimits narrow recovery for theft-prone property. ISO caps loss by theft at, for example, $2,500 for furs and fur garments, $2,500 for jewelry/watches/precious stones (except items worth $100 or less), and $250 for stamps, tickets, and letters of credit. Patterns or dies, and outdoor signs, also carry their own limits. Candidates should not assume "open peril" means "unlimited."

The Special Form also contains an anti-concurrent-causation (ACC) lead-in for certain exclusions (earth movement, flood, ordinance/law, governmental action, nuclear hazard, utility failure, war). The ACC language states the loss is excluded "regardless of any other cause or event that contributes concurrently or in any sequence to the loss." This means if an excluded peril and a covered peril combine, the excluded peril controls and the loss is barred — a heavily tested distinction.

The Special Form does, however, grant limited additional coverages the named-peril forms lack, including collapse from specified causes and limited coverage for "fungus," wet rot, and dry rot up to $15,000 in an annual aggregate when resulting from a covered cause of loss.

The "Special Form = All-Risk" Burden Shift

The biggest practical difference between the forms is who bears the burden of proof. Under Basic/Broad (named-peril) forms, the insured must prove the loss was caused by a listed peril. Under the Special form (CP 10 30, open-peril), the insurer must prove an exclusion applies to deny the claim. That burden shift is why the special form costs more and why "open-peril" answers pair with "insurer must prove exclusion."

Worked Form-Selection Scenario

A warehouse stores electronics. A loss occurs from a cause that is not on the named-peril ladder but is not specifically excluded (e.g., a freak accidental cause). Under CP 10 20 (Broad) the claim is denied — not a listed peril. Under CP 10 30 (Special) the claim is paid — open-peril, no exclusion. Switch the cause to flood and all three forms deny it (flood is excluded everywhere; the NFIP or DIC handles it). Matching a fact pattern to the right form outcome is the most common causes-of-loss question.

Sublimits Inside the Special Form

Even the open-peril Special form (CP 10 30) keeps sublimits and special exclusions: theft of certain property is limited, and perils like flood, earth movement, war, nuclear, ordinance or law, and wear/tear remain excluded just as in the named-peril forms. "Open peril" does not mean "all loss paid" — the exclusions and ACC clause still govern. Candidates who assume the special form covers flood/earthquake miss this.

Matching Causes-of-Loss Form to Business Need

A budget-minded warehouse choosing the cheapest option takes Basic (CP 10 10); a business wanting broader named perils takes Broad (CP 10 20); an operation wanting the widest protection and the insurer-bears-the-burden advantage takes Special (CP 10 30). The form is selected per coverage and shown on the property declarations — tying the business goal to the right form is the standard question.