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

Three Forms, Two Approaches

A Building and Personal Property form does not cover anything until a Causes of Loss form is attached. ISO offers three:

• Basic Form (CP 10 10) — named-peril; covers a list of 11 perils.
• Broad Form (CP 10 20) — named-peril; the Basic 11 plus three more, plus collapse and limited water damage.
• Special Form (CP 10 30) — open-peril ("all-risk"); covers all direct physical loss unless specifically excluded.

The deciding distinction: under named-peril forms the insured must prove the loss was caused by a listed peril. Under the Special (open-peril) form, coverage is presumed and the insurer must prove an exclusion applies. This burden-of-proof shift is the single most-tested concept here.

All three forms attach to the same Building and Personal Property Coverage Form; only the perils differ. The same building, limits, coinsurance, and deductible carry over — choosing Basic, Broad, or Special simply changes how broad the protection is and therefore the premium. Editions are commonly cited as the 10 10, 10 20, and 10 30 ISO forms.

Peril Coverage by Form

Basic = the first 11. Broad adds Falling Objects; Weight of Snow, Ice, Sleet; and Water Damage, plus Collapse. Only the Special form reaches theft and any unlisted accidental cause.

Earthquake and Flood Causes-of-Loss Forms

Because all three standard causes-of-loss forms exclude earth movement and water (flood), ISO publishes separate forms to buy them back. The Earthquake and Volcanic Eruption form (CP 10 40) covers shock and volcanic loss, typically with a percentage deductible applied to the value of each affected building (so a 5% deductible on a $2,000,000 building is $100,000). Commercial flood is written through the NFIP or a difference-in-conditions/excess flood policy, not the standard property forms.

The exam tests that these catastrophe perils are never part of Basic, Broad, or Special coverage and must be added by separate form or policy, usually with their own deductible structure distinct from the property deductible.

Exclusions Common to All Three Forms

The forms share a core set of exclusions. Memorize them because the Special form's "all-risk" promise is only as broad as its exclusions are narrow:

• Ordinance or Law — added cost of demolishing or rebuilding to current code (buy back with CP 04 05).
• Earth Movement — earthquake, landslide, sinkhole (volcanic action and sinkhole collapse are partial exceptions).
• Flood and Water — surface water, overflow, sewer backup; flood must be insured separately.
• War and Military Action.
• Nuclear Hazard.
• Utility Services — off-premises power failure (endorse back with CP 04 17).
• Wear and Tear, Rust, Corrosion, Deterioration — maintenance-type losses.
• Mechanical Breakdown (cover with Equipment Breakdown).

The first two groups (war, nuclear, earth movement, flood, ordinance/law) are sometimes called the "concurrent causation" exclusions because they apply even if a covered peril contributes to the loss.

Special Form Limitations and the "Additional" Exclusions

Even under the open-peril Special Form, several causes are covered only on a limited basis or are excluded outright. Knowing these prevents the trap of assuming "all-risk" means "everything":

• Theft is covered, but theft of property in unlocked autos, dishonesty by employees, and shortage found only on inventory are excluded.
• Water damage from accidental discharge is covered, but the resulting cost to repair the system that leaked is not, and continuous seepage over 14 days or more is excluded.
• Rain, snow, ice, or sleet damage to personal property in the open is excluded.
• Damage to glass and building interior by rain has limitations unless the exterior is first breached by a covered peril.
• Smoke from agricultural smudging or industrial operations is excluded.

Selecting the Right Form

The broader the form, the higher the premium. Insureds and underwriters choose based on exposure and budget:

On the exam, if a stem stresses that a loss came from an unusual or unlisted cause and there is no applicable exclusion, the correct policy almost always carries the Special Form — and the insurer, not the insured, must justify any denial.