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

Three Tiers, One Critical Pairing

The BPP coverage form describes what property is insured; a Causes of Loss form describes what perils it is insured against. Without one attached, the BPP covers nothing. ISO publishes three:

• Basic Form – CP 10 10: a named-peril form covering the original eleven perils.
• Broad Form – CP 10 20: Basic plus several additional named perils and a Collapse Additional Coverage.
• Special Form – CP 10 30: open-peril (all-risk) coverage — everything is covered unless specifically excluded.

The exam loves the burden-of-proof distinction. Under named-peril (Basic, Broad) the insured must prove the loss came from a listed peril. Under Special the insurer must prove an exclusion applies. That single shift is why Special form is broader and costs the most. A fourth option, the Earthquake form (CP 10 40), can be attached to any of the three to buy back the earth-movement exclusion.

What Each Tier Covers

The eleven Basic perils are worth memorizing cold because Broad simply builds on them. Note two precision traps: volcanic action (airborne shock waves, ash, lava flow) is covered, but a single eruption is treated as one occurrence within a 168-hour (seven-day) window; and vandalism does not include damage by theft except the building damage caused by burglars entering. Glass breakage is treated under separate provisions, not as a stand-alone Basic peril.

Special Form Exclusions and the Theft Trap

Because Special form is open-peril, you must know its exclusions, which is where points are won or lost:

• Excluded entirely: ordinance or law, earth movement (earthquake), governmental action, nuclear hazard, utility services failure, war and military action, and water (flood, surface water, sewer/drain backup).
• Also excluded: 'fungus', wet rot, dry rot, and bacteria beyond limited amounts.
• Excluded but coverable by endorsement: earthquake (CP 10 40), flood (separate NFIP or private flood), ordinance or law (CP 04 05), spoilage (CP 04 40), and utility services (CP 04 17).
• Maintenance exclusions: wear and tear, rust, corrosion, decay, hidden or latent defect, mechanical breakdown, settling, and inherent vice — these are the owner's upkeep responsibility.

Theft trap: Special form covers theft, but special sublimits apply. There is a $2,500 per-occurrence limit on theft of furs, jewelry, watches, precious stones, and precious metals (other than as part of furniture or fixtures), and limits on stamps, tickets, and letters of credit. Critically, money and securities are not Covered Property under the BPP at all — those require a Commercial Crime coverage form, regardless of which causes of loss form is attached.

Anti-Concurrent Causation and Choosing a Form

Special form contains an anti-concurrent causation lead-in: if an excluded peril (say, flood) combines with a covered peril to cause a single loss, the entire loss is excluded — the exclusion applies whether or not another cause contributed concurrently or in any sequence. Hurricane claims hinge on this: wind damage is covered, storm-surge flooding is excluded, and the anti-concurrent language lets insurers deny the flood portion entirely.

When choosing among the forms, the rule of thumb is breadth versus budget. A small office with a tight budget might accept Basic; a building exposed to winter weather wants Broad for ice and snow weight; a high-value or hard-to-classify risk wants Special for the burden-of-proof shift and theft coverage. On the exam, a stem emphasizing 'all risk,' 'unless excluded,' or 'theft of stock' points to Special (CP 10 30); a stem listing specific covered perils points to a named-peril form.

Builders Risk and Other Causes-of-Loss Pairings

The same three causes of loss forms attach to specialized property forms, and the exam tests the pairings. The Builders Risk Coverage Form (CP 00 20) insures buildings under construction; it is almost always written with the Special causes of loss form so that theft of materials and other construction-site perils are covered, and it terminates when the building is occupied, accepted, or after 90 days of unattended status.

A few precision points decide questions. The Special form's theft coverage does not extend to mysterious disappearance or shortage found only at inventory — those are excluded as unexplained loss. Glass breakage on the Broad and Special forms is covered, but the Basic form treats it narrowly. And the collapse Additional Coverage on Broad and Special is not a peril you insure against directly; it is a grant that pays for abrupt collapse from specified causes such as hidden decay or weight of contents.

Finally, remember that flood and earthquake are excluded by all three standard forms. Neither named-peril nor open-peril coverage includes them; the insured must buy separate flood (NFIP or private) and earthquake (CP 10 40) coverage. A stem describing earthquake or flood damage under a Special form is testing whether you know the open-peril form still excludes both. The same logic applies to the ordinance or law exclusion: code-upgrade cost is excluded even under Special, and only the CP 04 05 endorsement restores it, as the next section details.