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

How Commercial Property Defines Covered Perils

The BPP coverage form tells you what is insured; a separate Causes of Loss form tells you which perils trigger coverage. ISO offers three standard forms plus an earthquake form:

• Causes of Loss - Basic Form (CP 10 10)
• Causes of Loss - Broad Form (CP 10 20)
• Causes of Loss - Special Form (CP 10 30)
• Causes of Loss - Earthquake Form (CP 10 40)

Basic and Broad are named-peril forms (the policy lists covered causes). Special is an open-peril (all-risk) form (everything is covered unless excluded). Premium rises from Basic to Broad to Special as the coverage broadens.

Basic vs. Broad: The Named Perils

The Basic Form covers the classic perils, often memorized by the acronym FLEW VS HVR&V:

The Broad Form adds: falling objects; weight of snow, ice, or sleet; water damage (accidental discharge/leakage); and collapse as an Additional Coverage. Broad Form is essentially Basic plus these extra perils. Glass breakage is also addressed under Broad.

Trap: Both Basic and Broad are named-peril; the burden is on the insured to show the loss was caused by a listed peril.

Special Form: Open-Peril and the Burden Shift

The Special Form (CP 10 30) covers risk of direct physical loss unless specifically excluded. This open-peril (often called 'all-risk') approach reverses the burden of proof: the insurer must prove an exclusion applies to deny a claim, rather than the insured proving a peril is listed. This is why Special is the broadest and most expensive form.

Special Form also automatically picks up coverages that Basic/Broad do not, such as theft (subject to limitations on certain property) and transit, and it provides higher limits or broader terms on items like glass.

Think of the spectrum: Basic = fewest perils, cheapest; Broad = more perils; Special = open-peril, broadest, costliest.

Key Exclusions Under the Special Form

Because Special covers everything not excluded, the exclusions define its real scope. Standard exclusions include:

• Ordinance or Law (cost to comply with building codes) - needs CP 04 05 endorsement
• Earth Movement (earthquake, landslide) - needs Earthquake form
• Flood / surface water - needs separate flood coverage
• War and military action
• Nuclear hazard
• Power failure (off-premises utility interruption)
• Wear and tear, deterioration, mechanical breakdown, rust, corrosion, hidden defect
• Dishonest acts by the insured; faulty workmanship/design (with exceptions)

Trap: the 'big three' catastrophe gaps - flood, earthquake, and ordinance or law - are excluded under ALL three causes-of-loss forms and require separate coverage or endorsement.

Choosing the Right Form and Reading the Anti-Concurrent Clause

Matching an insured to the correct causes-of-loss form is a recurring exam task. A low-hazard, cost-sensitive risk with limited contents might accept the Basic Form; a typical small business that wants snow-load and water-damage protection chooses Broad; most commercial buyers who can afford it select Special for its open-peril breadth and burden-shifting advantage.

The Special Form contains an anti-concurrent causation lead-in to its exclusions. This language states that the listed perils are excluded regardless of any other cause or event that contributes concurrently or in any sequence. The practical effect: if an excluded peril (such as flood) and a covered peril both contribute to a loss, the exclusion can still bar coverage. This is why simply adding wind coverage does not buy back flood, and why separate flood and earthquake programs are essential.

Memory hook for the spectrum: Basic = bare-bones named perils; Broad = Basic plus snow/ice, water, falling objects, collapse; Special = open-peril, broadest, costliest, insurer must prove an exclusion.

Matching Risk to Causes-of-Loss Form

The practical exam skill is selecting the right form for a described insured. A bare-bones, cost-sensitive risk takes the Basic Form; a typical small business wanting snow-load, water-damage, and collapse protection takes the Broad Form; a buyer who can afford the broadest open-peril protection and the burden-shift takes the Special Form. Premium climbs across that spectrum in exchange for breadth.

The Big Three Gaps and Anti-Concurrent Causation

No matter which form is chosen, flood, earthquake, and ordinance or law are excluded and must be bought back separately or by endorsement. The Special Form's anti-concurrent-causation lead-in means that if an excluded peril such as flood contributes to a loss in any sequence with a covered peril, the exclusion still bars the loss. That is why merely adding wind coverage does not buy back flood, and why separate flood (NFIP or private) and earthquake (CP 10 40) programs are essential. Expect a scenario where wind and storm surge both damage a building - the surge portion is denied as flood.

Burden of Proof Drives the Claim

The deciding practical difference between the forms is who must prove what. Under Basic and Broad named-peril forms the insured must show the loss arose from a listed peril; if the cause is unknown, the claim fails. Under the Special open-peril form the loss is presumed covered and the insurer must prove an exclusion applies. This burden-shift is the chief reason most commercial buyers who can afford it select Special, and it is a frequent correct answer when a stem describes a loss of uncertain origin.