9.3 Causes of Loss Forms (Basic, Broad, Special)
Key Takeaways
Basic (CP 10 10) and Broad (CP 10 20) are named-perils forms; Special (CP 10 30) is open perils (all except exclusions).
Theft is covered ONLY under the Special form; flood and earthquake are excluded under all three.
Under named-perils forms the insured proves a covered peril; under Special the insurer must prove an exclusion.
Broad adds falling objects, weight of snow/ice/sleet, water damage, and glass breakage to Basic.
After 60 consecutive days of vacancy, certain perils are not paid and all other covered losses are reduced 15%.
Causes of Loss Forms
A commercial property coverage form (such as the BPP) describes WHAT property is covered, but a separate Causes of Loss form describes WHICH perils trigger coverage. There are three standard ISO forms, layered from narrowest to broadest.
- Basic Form (CP 10 10) — a named-perils form covering a fixed list, commonly remembered as the "WCSHAVVER" perils: Windstorm/hail, Civil commotion/riot, Smoke, Hail (part of windstorm), Aircraft/vehicles, Vandalism, Volcanic action, Explosion, Riot — plus fire, lightning, and sprinkler leakage.
- Broad Form (CP 10 20) — everything in Basic PLUS falling objects; weight of snow, ice, or sleet; water damage (accidental discharge from systems); and glass breakage (collapse is an additional coverage).
- Special Form (CP 10 30) — the broadest. It is an "open perils" (formerly "all-risk") form covering direct physical loss from any cause EXCEPT those specifically excluded. Special adds theft coverage, which neither Basic nor Broad includes.
The burden-of-proof flip
This is the single most important conceptual point of the section. Under named-perils forms (Basic and Broad), the insured must prove the loss was caused by a listed peril. Under the Special (open-perils) form, the burden flips: the insurer must prove an exclusion applies in order to deny the claim. Open-perils coverage is therefore more favorable to the insured.
How the three forms are priced and chosen
The forms are priced in ascending order — Special costs the most because it covers the most. An agent selects the form based on the client's risk tolerance and budget. A warehouse storing low-theft commodity goods in a dry region may accept Basic; a downtown retailer with valuable, easily stolen inventory and burst-pipe exposure needs Special for theft and water damage. Remember that the coverage form (what property is insured) and the causes-of-loss form (which perils apply) are chosen independently, so the same BPP can be paired with any of the three peril forms.
| Peril | Basic (CP 10 10) | Broad (CP 10 20) | Special (CP 10 30) |
|---|---|---|---|
| Fire, lightning, explosion | Covered | Covered | Covered |
| Windstorm, hail, smoke, riot, vandalism | Covered | Covered | Covered |
| Sprinkler leakage, volcanic action | Covered | Covered | Covered |
| Falling objects; weight of snow/ice/sleet | Not covered | Covered | Covered |
| Water damage (accidental discharge), glass breakage | Not covered | Covered | Covered |
| Theft | Not covered | Not covered | Covered |
| Coverage trigger | Named perils | Named perils | Open perils (all except exclusions) |
| Burden of proof | Insured | Insured | Insurer |
Trap: Theft is covered ONLY under the Special form. If a question describes stolen business personal property, the answer is Special (CP 10 30). Likewise, flood and earthquake are excluded under all three forms and require a separate policy or endorsement (such as a Difference in Conditions policy or the NFIP for flood).
Common exclusions across all three forms
All three causes-of-loss forms exclude the same major catastrophe and "uninsurable" perils, regardless of how broad the form is:
- Flood / surface water / mudflow (buy NFIP or DIC).
- Earthquake and earth movement (buy endorsement CP 10 40 or DIC).
- Ordinance or law (cost to comply with building codes — buy CP 04 05).
- War, nuclear hazard, governmental seizure.
- Wear and tear, deterioration, mechanical breakdown, and mold/fungus (gradual losses).
The vacancy provision
The causes-of-loss forms cut coverage when a building has been vacant for more than 60 consecutive days before a loss. After 60 days of vacancy, the insurer (a) will not pay at all for loss caused by vandalism, sprinkler leakage, building glass breakage, water damage, theft, or attempted theft; and (b) reduces the payment by 15% for any other covered cause of loss. A building is considered vacant when it does not contain enough business personal property to conduct customary operations.
Worked vacancy example: A building vacant for 75 days suffers a $40,000 covered fire loss. Fire is not on the no-pay list, so it is payable, but the 15% vacancy reduction applies: $40,000 × (1 - 0.15) = $34,000 (before deductible).
A retail store's business personal property is stolen overnight. Under which Causes of Loss form(s) would this theft be covered?
Basic and Broad only
Broad only
Special only (CP 10 30)
All three forms cover theft equally
A building has been vacant for 75 consecutive days when a covered fire causes $40,000 in damage. How does the vacancy provision affect the payment (before deductible)?
The loss is denied entirely because the building was vacant over 60 days
The loss is paid in full because fire is not on the no-pay list
The payment is reduced 15% to $34,000
The payment is reduced 25% to $30,000
Choosing Among Basic, Broad, and Special — and the Earthquake/Flood Gap
The three causes-of-loss forms determine which perils the BPP responds to:
| Form | Perils | Burden of proof |
|---|---|---|
| Basic (CP 10 10) | Fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot, vandalism, sprinkler leakage, sinkhole, volcanic action | Insured proves a listed peril |
| Broad (CP 10 20) | Basic + falling objects, weight of snow/ice, water damage, collapse | Insured proves a listed peril |
| Special (CP 10 30) | Open peril (all risks of direct physical loss) | Insurer proves an exclusion |
Exam alert: All three forms exclude flood and earthquake; these require a separate Earthquake (CP 10 40) form/endorsement and a flood policy (NFIP or difference-in-conditions). The Special form's value is the burden-of-proof flip — covered unless excluded — but it still carries the same earth-movement and water exclusions, plus exclusions for wear/tear, dishonesty, and ordinance or law. A "mysterious disappearance" of stock is typically covered under Special but not under Basic/Broad, a recurring distinction.
Sections you finish are checked off in the contents.