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

Why a Separate Form

A commercial property policy needs two forms: a coverage form (the BPP, CP 00 10) that says what is insured, and a causes of loss form that says which perils are covered. Choosing the causes of loss form is the single biggest driver of premium and of how a claim is adjusted.

Basic Form (CP 10 10) — 11 Named Perils

The Basic form is named peril: the insured must prove the loss came from a listed peril.

Theft is not a Basic-form peril.

Broad Form (CP 10 20) — Adds Coverage

The Broad form includes all 11 Basic perils and adds:

• Falling objects (exterior must be penetrated first for interior damage)
• Weight of snow, ice, or sleet
• Water damage — sudden, accidental discharge from plumbing, HVAC (heating, ventilation, and air conditioning), or appliances (not flood)
• Breakage of building glass (limited)
• Collapse as an additional coverage from specified causes

Theft becomes covered at the Broad level.

Special Form (CP 10 30) — Open Peril

The Special form covers all risks of direct physical loss EXCEPT those excluded. Because coverage is presumed, the burden of proof shifts to the insurer to show an exclusion applies. It is the broadest, most expensive form and is the basis for the Businessowners Policy building coverage (9.5).

Exclusions Common to All Three Forms

Flood and earthquake are never covered by any of the three forms. Flood needs a separate flood policy (often the National Flood Insurance Program, the NFIP); earthquake needs the CP 10 40 endorsement.

Side-by-Side Comparison

Anti-Concurrent-Causation

The exclusions carry an anti-concurrent-causation lead-in: excluded perils are excluded "regardless of any other cause or event that contributes concurrently or in any sequence." If flood (excluded) and wind (covered) combine, the flood-attributable portion stays excluded — the language adjusters use to split hurricane wind from storm surge.

Worked Scenario

A pipe bursts overnight and water ruins a retailer's inventory. The Broad and Special forms cover it as accidental discharge of water; the Basic form pays nothing. If instead a river overflows into the store, no form pays — that is flood.

Common Traps

• Theft is the most-missed item: Basic excludes it, Broad and Special cover it.
• Water damage is not flood — internal leaks can be covered; rising surface water never is.
• A building vacant more than 60 consecutive days loses vandalism, water-damage, theft, glass, and sprinkler-leakage coverage, and other covered losses are cut 15 percent.
• Open peril is not unlimited — theft of jewelry, furs, patterns, and dies carries $2,500 special sublimits.

Collapse as a Special Additional Coverage

Under the Broad and Special forms, collapse is not a peril but an additional coverage triggered only by specified causes: a covered cause of loss; hidden decay; hidden insect or vermin damage; weight of people or personal property; weight of rain collecting on a roof; or use of defective material or methods during construction. Settling, cracking, shrinking, bulging, and expansion are not collapse. A building that merely cracks has no collapse claim; a roof that caves in from concealed rot does.

Picking the Right Form

Because the Special form covers anything not excluded, it picks up oddball losses — a forklift puncturing a wall, paint spilled across stock — that a named-peril form would never list. That breadth is exactly why it commands the highest premium and why exclusions, not inclusions, are the study focus.

Theft Sublimits Inside the Special Form

Even where the Special form covers theft, certain property carries special limits: typically $2,500 for furs, $2,500 for jewelry and watches lost by theft, $2,500 for patterns and dies, and $250 for theft of stamps, tickets, and letters of credit. A candidate who assumes open peril means unlimited theft recovery on a $40,000 diamond inventory walks into a classic trap — the policy pays only the $2,500 sublimit unless a separate inland marine jewelers floater is purchased. The lesson generalizes: open peril controls which causes are covered, but built-in sublimits still cap how much is paid on volatile, easily concealed property.