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

Two Forms Make a Policy

A commercial property policy needs two forms: a coverage form (the BPP, CP 00 10) saying what is insured, and a Causes of Loss form saying which perils are covered. The causes-of-loss choice is the biggest single driver of premium and of how claims are adjusted.

Basic Form (CP 10 10) — 11 Named Perils

The Basic form is named-peril: the insured must prove the loss arose from a listed peril.

Theft is NOT a Basic-form peril.

Broad Form (CP 10 20) and Special Form (CP 10 30)

The Broad form (CP 10 20) adds three perils to the Basic eleven: falling objects, weight of snow, ice, or sleet, and water damage from accidental discharge. It also adds a limited collapse additional coverage. That is 14 named perils total. Theft is still excluded.

The Special form (CP 10 30) is open-peril ("all-risk"): it covers any direct physical loss unless excluded. This is the broadest option, and it is the form that finally includes theft.

The burden-of-proof shift is heavily tested: under named-peril forms the insured proves coverage; under Special the insurer must prove an exclusion to deny.

Common Exclusions and the Vacancy Provision

All three forms share standard exclusions, including flood, earthquake, war, nuclear hazard, wear and tear, and ordinance or law. Flood and earthquake are NOT covered by any of the three forms — they require separate policies or endorsements.

The Vacancy Provision is a frequent trap. A building vacant more than 60 consecutive days loses coverage for vandalism, sprinkler leakage, glass breakage, theft, and water damage; other covered losses are paid at 85 percent (a 15% reduction). A building is "vacant" when it holds less than 31% of its usable area in operations. For a tenant, only the unit rented matters; for an owner, the whole building is judged.

Choosing the Right Form on the Exam

Stems often hide the answer in the type of loss and the type of business. A jewelry store or electronics retailer must have the Special form because theft is its dominant exposure, and only Special covers theft. A warehouse exposed to roof collapse under heavy snow needs at least the Broad form, because weight of ice and snow is a Broad-form addition the Basic form lacks.

Watch the windstorm interior trap: under all three forms, interior damage from wind-driven rain is covered only if the wind first creates an opening in the roof or walls. If rain blows through an already-open window, the interior loss is excluded. And remember that even the open-peril Special form does not silently include flood or earthquake — those exclusions survive in every form and demand separate coverage.

Special-Form Limitations

The Special form is open-peril but not unlimited. It carries internal limitations that pay only when a specified cause is involved or cap certain property. For example, theft losses to furs, jewelry, precious stones, and stamps are limited (commonly $2,500 for theft of these), and loss to glass can be subject to a sublimit. Damage from rain, snow, ice, or sleet to personal property in the open is excluded. These carve-outs explain why a high-value jewelry or fine-arts risk still buys a separate inland marine floater on top of the Special form: the floater covers the value the property-form sublimits leave exposed.

Named-Peril Versus Open-Peril Logic

The single most useful mental model for these forms is the direction of proof. Named-peril forms (Basic and Broad) start from zero coverage and the insured must affirmatively connect the loss to a listed peril; anything not on the list is simply not covered. Open-peril (Special) starts from full coverage and works backward — every loss is covered until the insurer points to an exclusion or limitation.

That is why the Special form costs more: the insurer assumes coverage for unanticipated and undescribed losses, including theft. When a stem hands you an unusual cause of loss not in the named list, the answer almost always turns on whether the policy is Special (covered) or named-peril (not covered).

Causes of Loss Forms: Basic, Broad, Special

Commercial property separates what is insured (the BPP coverage form, CP 00 10) from which perils apply, selected via a Causes of Loss form. The exam tests the three tiers precisely. Basic (CP 10 10) lists named perils — fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot/civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. Broad (CP 10 20) adds falling objects, weight of snow/ice/sleet, water damage, and limited collapse. Special (CP 10 30) is open-peril — covered unless excluded.

The burden of proof flips between named-peril and open-peril forms — a top exam trap. Under Basic/Broad (named peril), the insured must prove the loss was caused by a listed peril. Under Special (open peril), the loss is presumed covered and the insurer must prove an exclusion applies.

Worked scenario: A warehouse roof leaks and water-stains stored goods from an unknown source. On a Special form, the insurer pays unless it can prove an excluded cause (e.g., wear/tear or seepage over 14+ days); on a Basic form, the insured recovers only if it can tie the loss to a listed peril such as windstorm-driven rain entering through a wind-created opening. The same physical loss produces opposite outcomes depending on the causes-of-loss form selected.