9.3 Causes of Loss Forms (Basic, Broad, Special)
Key Takeaways
- Causes of Loss forms determine which perils trigger BPP coverage: Basic (CP 10 10), Broad (CP 10 20), and Special (CP 10 30).
- Basic covers fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot, vandalism, sprinkler leakage, sinkhole, and volcanic action.
- Broad adds falling objects, weight of snow/ice/sleet, water damage, collapse, and building glass breakage.
- Special is open-peril (covered unless excluded), is the only form that covers theft, and shifts the burden of proof to the insurer.
- Flood, earthquake, ordinance/law, nuclear, war, governmental action, and utility failure are excluded on all three forms.
How Causes of Loss Forms Work
The BPP says what property is covered; a Causes of Loss Form says which perils trigger that coverage. ISO publishes three, and the exam expects you to rank their breadth:
- Basic Form (CP 10 10) — a short named-peril list.
- Broad Form (CP 10 20) — Basic plus additional named perils.
- Special Form (CP 10 30) — 'all-risk' (open peril): covered unless excluded.
Named-peril forms put the burden of proof on the insured to show the loss came from a listed peril. The Special Form flips it: the insurer must prove an exclusion applies.
Basic Form Perils (CP 10 10)
Memorize the Basic list — a mnemonic is WCSHARRVV+:
| Basic perils |
|---|
| Fire |
| Lightning |
| Explosion |
| Windstorm or Hail |
| Smoke |
| Aircraft or Vehicles |
| Riot or Civil Commotion |
| Vandalism |
| Sprinkler Leakage |
| Sinkhole Collapse |
| Volcanic Action |
Note that Basic does NOT include collapse, falling objects, weight of snow/ice/sleet, or water-damage perils — those start at Broad.
Broad Form Adds (CP 10 20)
The Broad Form = all Basic perils plus:
- Falling objects
- Weight of snow, ice, or sleet
- Water damage (sudden accidental discharge from plumbing/appliances — not flood)
- Collapse (as an Additional Coverage from specified causes such as hidden decay or vermin damage)
- Breakage of building glass
The Broad Form is named-peril, so the insured still must prove the loss was one of these. Flood, earthquake, and gradual seepage remain excluded on all three forms.
Special Form (CP 10 30) — Open Peril
The Special Form covers risks of direct physical loss unless specifically excluded. It is the broadest and most commonly recommended. Key built-in features:
- Covers theft (Basic and Broad do not).
- Limited coverage for property loss by theft of furs, jewelry, patterns, etc., with special sublimits.
- Burden of proof on the insurer to invoke an exclusion.
Major Exclusions (all three forms)
- Ordinance or Law
- Earth Movement (earthquake)
- Governmental Action
- Nuclear Hazard
- Utility Services failure
- War and Military Action
- Water (flood, surface water, sewer backup, underground water)
These seven are absolute on the named-peril forms too; the difference is that Special covers everything not on this list, while Basic/Broad cover only their stated perils.
A warehouse suffers a theft of inventory. Which Causes of Loss form provides coverage for this loss?
Additional Coverages and Coverage Extensions
Beyond the named perils, the Causes of Loss forms grant Additional Coverages that apply on Broad and Special:
- Collapse — abrupt falling-in from specified causes (hidden decay, insect/vermin damage, weight of people or rain, defective construction if collapse is hidden).
- Fire Department Service Charge — up to $1,000 when the fire department is called.
- Pollutant Cleanup and Removal — up to $10,000 per 12-month period to extract pollutants from land or water if release results from a covered peril.
- Increased Cost of Construction — limited code-upgrade coverage (the small built-in amount; the CP 04 05 endorsement buys more).
These caps are tested verbatim, so memorize the $1,000 fire-service and $10,000 pollutant figures.
Burden of Proof — The Tested Concept
| Form | Trigger | Who proves what |
|---|---|---|
| Basic / Broad (named peril) | Loss must match a listed peril | Insured proves the peril is covered |
| Special (open peril) | Any direct physical loss | Insurer proves an exclusion applies |
Worked scenario. A pipe bursts and soaks stock. Under Broad, the insured must show 'water damage — accidental discharge' is a listed peril (it is) and that it was not gradual seepage (excluded). Under Special, coverage is presumed and the insurer must prove an exclusion such as continuous-or-repeated-seepage applies. This shift in burden is why Special commands a higher premium.
Special-Form Sublimits and Exclusions to Memorize
Even on the Special Form, certain property carries reduced limits or special exclusions. Theft of furs, jewelry, watches, precious stones, and patterns is limited to $2,500 unless scheduled. Loss to property in transit is excluded unless inland marine is added, and theft of building materials not yet attached is excluded if the building is unoccupied.
The dishonest acts of the insured, partners, employees, or anyone entrusted with the property are excluded on every form — employee theft belongs on a crime coverage part, not a property form. These carve-outs are why a thorough producer pairs Special-Form property with crime and inland marine for full protection.
Under the Special (open-peril) Causes of Loss Form, who bears the burden of proof in a coverage dispute?
Three Causes-of-Loss Forms and Their Reach
Commercial property coverage breadth is set by a separate causes-of-loss form, chosen independently of the coverage form. The Basic Form (CP 10 10) covers a short named-peril list. The Broad Form (CP 10 20) adds perils and includes a limited collapse coverage. The Special Form (CP 10 30) provides open-peril (all-risk) coverage, paying for any direct physical loss except those excluded. Selecting the causes-of-loss form is how an insured tunes coverage from minimal to comprehensive, and the exam tests which perils each form does and does not reach.
The Basic Form Perils
The Basic Form covers fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. A useful memory aid groups these as the traditional fire-and-extended-coverage perils plus a few additions. Note that the Basic Form does not include breakage of glass, falling objects, weight of snow, or water damage beyond sprinkler leakage; those appear only on the Broad or Special forms. The Basic Form is the answer when a scenario describes the narrowest, lowest-cost commercial property coverage.
The Broad Form Additions and Collapse
The Broad Form adds breakage of building glass, falling objects, weight of snow/ice/sleet, and water damage (accidental discharge from a system), and it adds the Additional Coverage for collapse caused by specified perils such as hidden decay, insect or vermin damage, weight of people or property, and defective construction methods. This collapse coverage is conditional and does not cover mere settling or cracking. The Broad Form occupies the middle ground, broader than Basic but still named-peril, so an unlisted cause of loss is not covered even under the Broad Form.
The Special Form and Its Exclusions
The Special Form covers risks of direct physical loss unless excluded, shifting the burden of proving an exclusion to the insurer. Its key exclusions include ordinance or law, earth movement, governmental action, nuclear hazard, utility services off premises, war, water (flood, surface water, sewer backup, and underground water), and a group of limitations for wear and tear, rust, decay, smog, mechanical breakdown, settling, pollution, and dishonest acts of the insured. The Special Form also limits theft of certain property and money.
Because there is no peril list, Special Form losses are analyzed against the exclusions, and recognizing that flood and earth movement remain excluded even under open-peril coverage is a frequent exam point.