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

Causes of Loss forms select the perils

The BPP says what property is covered; a Causes of Loss form says why (which perils) it is covered. One of three forms is attached, listed in increasing breadth of protection.

Basic Form (CP 10 10) - named peril

The Basic Causes of Loss Form is a named-peril form: only the listed perils are covered, and the insured must prove the loss came from a covered peril. Its perils are remembered with WCSHAVVERS: Windstorm/hail, Civil commotion/riot, Smoke, Hail, Aircraft/vehicles, Vandalism, Volcanic action, Explosion, Riot, Sprinkler leakage, plus Fire and Lightning.

Broad Form (CP 10 20) - named peril, wider

The Broad Causes of Loss Form includes everything in Basic and adds:

• Breakage of building glass
• Falling objects
• Weight of ice, snow, or sleet
• Water damage (accidental discharge or leakage of water/steam)
• Collapse (as an additional coverage)

It remains a named-peril form, so the insured still proves the cause.

Special Form (CP 10 30) - open peril

The Special Causes of Loss Form is open-peril (all-risk): it covers direct physical loss unless specifically excluded. This shifts the burden of proof to the insurer, which must show an exclusion applies. Special adds theft coverage (absent from Basic and Broad) and the broadest protection.

Key Special form exclusions

Exam traps

The single most-tested point: named peril = insured proves coverage; open peril = insurer proves the exclusion. Also remember theft is covered only by the Special form, and that flood and earthquake are excluded on all three forms and must be added separately.

Reading a causes-of-loss question correctly

The fastest way to answer a property question is to identify which causes-of-loss form is attached, because that fixes the burden of proof. On a named-peril form (Basic or Broad) the insured must prove the loss arose from a listed peril; if the cause is uncertain, coverage fails. On the open-peril Special form, loss is presumed covered and the insurer must prove an exclusion applies; uncertainty favors the insured. Examiners give an ambiguous-cause scenario and ask who wins - the answer flips with the form.

Theft and the gap between Broad and Special

A defining difference is theft: it is not a peril on Basic or Broad but is covered under Special (subject to theft exclusions like insured dishonesty and inventory shortage). A retailer that buys a Broad form to save premium and then suffers a burglary recovers nothing for stolen stock - a classic fact pattern. Mercantile theft exposures point toward Special form or a Crime coverage part.

Special-form limits that survive the all-risk label

"Open peril" does not mean unlimited. The Special form keeps special limits and anti-concurrent-causation language, sublimits theft of furs, jewelry, patterns, and stamps, and excludes wear and tear, mechanical breakdown, rust, corrosion, hidden decay, vermin, and settling/cracking. Collapse and ordinance-or-law gaps must be restored separately. Takeaway: Special is broad on sudden, accidental, external events and narrow on gradual, internal, maintenance events.

Anti-concurrent-causation clause

Property forms state that an excluded peril is not covered even if a covered peril contributes "in any sequence." The textbook example is a hurricane bringing both wind (covered) and flood (excluded): the clause lets the insurer deny the flood portion even though covered wind occurred simultaneously. This is why coastal insureds need separate flood coverage and why the clause recurs on the exam.

Quick comparison

Restoring the big exclusions on a Special form

Even the open-peril Special form (CP 10 30) excludes the catastrophic and maintenance perils, and the exam expects you to name the fix for each gap. Flood is restored by a separate flood policy or a Difference in Conditions form; earthquake by the CP 10 40 earthquake endorsement; ordinance or law by CP 04 05; and equipment/boiler breakdown by an Equipment Breakdown coverage part. Wear and tear, rust, corrosion, hidden decay, and settling remain uninsurable maintenance items.

The recurring question gives a Special-form loss caused by an excluded peril and asks how the insured could have covered it - the answer is always a specific endorsement or separate policy.

Applying named-versus-open to a mixed loss

Put the burden-of-proof rule into a scenario. A warehouse fire (covered on all three forms) is straightforward. But suppose stock is damaged by an unexplained cause: on a Basic or Broad (named-peril) form the insured must prove a listed peril and likely loses; on the Special (open-peril) form the insurer must prove an exclusion and the insured likely wins. Now add theft of inventory: covered only on the Special form, never on Basic or Broad.

Finally, a hurricane brings wind (covered) and flood (excluded): the anti-concurrent-causation clause lets the insurer deny the flood portion even though covered wind occurred. Walking a single mixed loss through each form is exactly how the exam separates strong candidates.