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

Perils Come From the Causes of Loss Form

The BPP describes WHAT is covered; the Causes of Loss form describes the PERILS — the WHY a loss is paid. Attaching the right form is what turns a property schedule into actual coverage. Three forms exist, in escalating breadth.

Basic Form (CP 10 10) — Named Perils

The Basic Form lists the covered perils explicitly. Memorize them; the exam tests the list directly:

• Fire
• Lightning
• Explosion
• Windstorm or hail
• Smoke
• Aircraft or vehicles
• Riot or civil commotion
• Vandalism
• Sprinkler leakage
• Sinkhole collapse
• Volcanic action

A helpful mnemonic for fire-related coverage is WCSHAVVERS variants, but the cleanest approach is rote recall. If a peril is not on the Basic list, it is not covered under Basic.

Broad Form (CP 10 20) — Basic Plus More

The Broad Form includes everything in the Basic Form and adds:

• Breakage of building glass
• Falling objects
• Weight of snow, ice, or sleet
• Water damage — accidental discharge or leakage from plumbing, heating, A/C, or other systems
• Collapse — from specified causes (hidden decay, hidden insect/vermin damage, weight of people/property, defective construction)

Special Form (CP 10 30) — Open Perils

The Special Form is open perils (formerly 'all-risk'). It covers risks of direct physical loss EXCEPT those specifically excluded or limited. This is the broadest and most-tested form because it reverses the burden of proof:

This burden shift is a favorite exam question. Under Special, theft becomes covered (subject to limits on certain property), and the insured is in a much stronger position at claim time.

Exclusions Common to All Forms

All three Causes of Loss forms share core exclusions. These are usually excluded because they are catastrophic, predictable, or insurable elsewhere:

• Ordinance or Law — increased cost to rebuild to current code
• Earth Movement — earthquake, landslide, sinkhole (except as covered)
• Governmental Action — seizure or destruction by order
• Nuclear Hazard
• Utility Services — off-premises power failure (buy-back available)
• War and Military Action
• Water — flood, surface water, sewer backup, underground water

Many exclusions are anti-concurrent causation clauses: if an excluded cause contributes to the loss in any sequence, the loss is excluded — even if a covered peril also contributed. Earthquake-then-fire is the classic illustration: the resulting fire is typically covered even though earthquake is excluded, but the form's wording controls.

Special Form Limitations (Not Outright Exclusions)

The Special Form covers theft, but applies special limits to theft-prone property: typically up to $2,500 for furs/fur garments, $2,500 for jewelry/watches/precious stones, $2,500 for patterns/dies/molds, and $250 for stamps/tickets/letters of credit. These are sub-limits, not exclusions — coverage exists but is capped.

The Special Form also excludes certain causes that the named-perils forms never reach because they never grant them: wear and tear, rust, corrosion, hidden decay, insects/vermin, mechanical breakdown, and dampness. These are maintenance issues, not fortuitous losses.

Choosing a Form on the Exam

When a question describes an unusual loss (a forklift puncturing a wall, a delivery truck backing into a dock), test it: is it a Basic peril? If not, is it a Broad addition? If neither, only the Special (open perils) form responds — and only if no exclusion applies. Walking the three forms in order is the reliable method for these scenarios.

Vacancy Provision

All three forms carry a vacancy condition that reduces or denies coverage when a building has stood vacant for more than 60 consecutive days before a loss. After 60 days vacant, the insurer will not pay for vandalism, sprinkler leakage, building glass breakage, water damage, theft, or attempted theft, and reduces all other covered losses by 15%. A building is considered vacant when it holds less than 31% of its total square footage in customary use. This provision routinely appears in scenario questions about empty rental units.

The Three Forms Side by Side

Standard Exclusions and the Special Form's Limitations

Even the Special form excludes the predictable categories: ordinance or law, earth movement, flood, war, nuclear hazard, wear and tear, and intentional acts, often reinforced by an anti-concurrent causation clause that bars a loss when an excluded peril contributes concurrently with a covered one. The Special form also contains special limitations — for example, limited coverage for theft of certain property, and exclusions for damage from rain to property in the open.

Flood and earthquake are added only by separate policies or the Difference in Conditions (DIC) form. Recognizing that the Special form is "open peril minus a defined exclusion list" — and that theft is covered only under the Special form — is the core commercial-property peril question.