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

Choosing the peril menu

The BPP says what is covered; a Causes of Loss form says which perils trigger coverage. ISO offers three, plus an earthquake form, each a separate attachment:

• Basic Form — CP 10 10
• Broad Form — CP 10 20
• Special Form — CP 10 30
• Earthquake Form — CP 10 40 (adds earthquake/volcanic eruption)

Basic and Broad are named-peril forms: the insured must prove the loss came from a listed peril. Special is open-peril ("all-risk"): every cause is covered unless specifically excluded — so the burden shifts to the insurer to prove an exclusion applies.

What each form covers

A memory aid: Broad = Basic + the "falling/weight/water/glass/collapse" group. Note theft is NOT in Basic or Broad — only the Special form covers theft (subject to special limits on certain property like furs, jewelry, and stamps).

Special form exclusions and special limits

Because Special is open-peril, the exclusions are where the exam lives. Common excluded causes include earth movement, governmental action, nuclear hazard, war, water (flood/sewer backup), wear and tear, and "ordinance or law." Theft IS covered under Special, but there are special limits — for example, the form caps coverage at $2,500 for theft of furs, jewelry, watches, and precious stones, and $2,500 for theft of patterns, dies, molds, and forms.

Trap: the Concurrent Causation / Anti-Concurrent Causation language means that if an excluded peril (e.g., flood) and a covered peril combine to cause loss, the exclusion can bar the entire claim. Also, the difference between the forms drives premium: Special costs the most because it covers the most and shifts proof to the insurer.

Reading exclusions: the three tiers in the Special form

Special-form exclusions are organized in tiers, and the exam expects you to recognize the structure. The first tier are the "anti-concurrent" exclusions introduced by the lead-in that the loss is excluded "regardless of any other cause or event that contributes concurrently or in any sequence": ordinance or law, earth movement, governmental action, nuclear hazard, utility services failure, war and military action, and water (flood, surface water, sewer backup, underground water). When any of these contributes, coverage is barred even if a covered peril also operated.

The second tier excludes causes like artificially generated electrical current, delay/loss of use/loss of market, smoke from agricultural smudging, wear and tear, rust/corrosion, hidden decay, settling/cracking, insects/vermin, and mechanical breakdown — but several of these contain ensuing-loss exceptions: if wear and tear leads to a specified covered peril (such as a resulting fire or water discharge), that ensuing loss is covered.

The third tier addresses special situations like collapse (limited), and losses to the interior of a building from rain/snow unless the building first sustains damage that lets the weather in. A worked trap: a worn pipe (excluded wear and tear) bursts and floods a stockroom. The pipe repair is excluded, but the resulting water damage to stock is covered as an ensuing loss — candidates who stop at "wear and tear is excluded" miss the payment.

Matching the Commercial Causes-of-Loss Form to the Risk

The commercial property coverage grant lives in a separate Causes of Loss form attached to the BPP, and the exam tests choosing among the three editions. Basic (CP 10 10) is named-peril covering the core group (fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot/civil commotion, vandalism, sprinkler leakage, sinkhole collapse, volcanic action). Broad (CP 10 20) adds falling objects, weight of ice/snow/sleet, water damage from accidental discharge, building glass breakage, and collapse from specified causes. Special (CP 10 30) is open-peril, covering all direct physical loss except stated exclusions.

The Special form's exclusions follow a structured pattern: a group of always-excluded catastrophic causes (ordinance/law, earth movement, governmental action, nuclear, war, water/flood), a group excluded unless loss ensues, and a group of limitations (such as theft of building materials, or damage from steam-equipment explosion). Recognizing that flood and earth movement are excluded on every edition, and that the Special form merely shifts the burden of proof to the insurer, is the load-bearing exam point.

Earthquake and Flood Are Separate Programs

Because earthquake and flood are catastrophic and geographically correlated, they are never in the standard causes-of-loss forms. Earthquake is added through the Earthquake and Volcanic Eruption (CP 10 40) form, often with a percentage deductible. Flood is written through the NFIP commercial policy or a private/excess flood market, or the ISO Flood Coverage (CP 10 65) endorsement. Candidates should be ready to recommend the correct separate vehicle rather than assume the Special form's breadth reaches these perils.