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

Causes of Loss Forms: How Commercial Property Defines a Covered Peril

The BPP says what property is covered; a separate Causes of Loss form says which perils are covered. ISO publishes three standard forms plus an earthquake form, and the choice dramatically changes the breadth of coverage:

• Basic (CP 10 10) — a named-peril list.
• Broad (CP 10 20) — the Basic list plus several more named perils.
• Special (CP 10 30) — open-peril (“all risk”) coverage; everything is covered unless excluded.

Basic vs. Broad: the Named Perils

Basic Form (CP 10 10) covers the classic named perils, often memorized as FLEEC SHAVVR: Fire, Lightning, Explosion, Equipment (not used—see note), Civil commotion/riot, Smoke, Hail/windstorm, Aircraft/vehicles, Vandalism, Volcanic action, sprinkler leakage, sinkhole collapse.

Broad Form (CP 10 20) adds: falling objects, weight of snow, ice, or sleet, water damage (accidental discharge from plumbing), collapse (as an additional coverage), and breakage of building glass. Broad is the Basic list plus these extras.

Special Form: Open Peril and Its Key Exclusions

The Special Form (CP 10 30) flips the logic: it covers direct physical loss unless the policy specifically excludes it. This shifts the burden of proof to the insurer to show an exclusion applies, which is why Special is the broadest and most expensive option.

Major exclusions on the Special form include: ordinance or law, earth movement, governmental action, nuclear hazard, utility failure, war, water (flood/sewer backup), wear and tear, and certain employee dishonesty. Theft is covered under Special but subject to special limits on items such as furs, jewelry, and tickets.

Choosing a Form and the Earthquake Add-On

On the exam, the practical question is matching client need to form. A business wanting the broadest protection and willing to pay buys Special; a budget-driven client accepting a named-peril list buys Basic or Broad.

Earthquake and volcanic eruption are excluded on all three causes-of-loss forms; coverage is added with the Earthquake and Volcanic Eruption form (CP 10 40). Flood is never covered by these forms — it requires the NFIP or a private flood policy.

Reading the Burden of Proof

The practical difference among the forms is who must prove what. Under Basic and Broad (named-peril) forms, the insured must show the loss came from a listed peril — if the cause is unlisted, there is no coverage. Under the Special (open-peril) form, coverage is presumed and the insurer must prove an exclusion applies to deny. This reversal is why Special is broader and costs more, and why exam scenarios with unusual causes of loss hinge on which form is attached.

Theft and Special Limits Under the Special Form

The Special form covers theft, which the Basic and Broad forms do not include by default (theft must be added by endorsement on those). But Special imposes special limits on theft-prone property — for example, limited recovery on furs, jewelry, watches, precious metals, stamps, tickets, and dies/patterns — and excludes certain dishonesty and mysterious-disappearance situations. Knowing that the Special form gives theft coverage subject to category sublimits, while named-peril forms need a theft endorsement, is a recurring distinction.

Concurrent Causation and Anti-Concurrent Wording

When a loss results from two causes — one covered and one excluded — the anti-concurrent causation language in the exclusions can bar the entire loss if an excluded peril (such as flood or earth movement) is part of the chain, regardless of the order of events. This is why flood-plus-wind losses generate so much litigation. The exam may give a hurricane that causes both wind damage (covered) and storm-surge flooding (excluded) and ask how the anti-concurrent clause affects the flood portion — it remains excluded even though wind contributed.

Matching Client Need to the Right Form

The producer's job is to align the breadth of the causes-of-loss form with the client's risk tolerance and budget. A business that wants the broadest protection and can afford it chooses Special, accepting that theft is covered (with category sublimits) and that only the listed exclusions apply.

A cost-conscious client willing to accept a defined list of perils chooses Basic or Broad, understanding that an unlisted cause is simply not covered and that theft must be added by endorsement. Whatever the form, flood and earthquake remain excluded and require the NFIP/private flood and the Earthquake form respectively. The recurring exam pattern presents a specific loss (a deer crashing through a window, a pipe freezing, an earthquake) and asks which form — if any — responds, testing both the named-peril lists and the universal flood/quake exclusion.

Worked Comparison Across the Three Forms

Take a single loss and run it through each form. A windstorm tears off roofing: covered under all three (windstorm is a Basic peril). Snow load collapses a flat roof: covered under Broad and Special (weight of ice/snow/sleet is a Broad addition), but not Basic. A forklift battery shorts and a mysterious overnight disappearance of tools occurs: theft is covered only under Special (subject to sublimits), not the named-peril forms without a theft endorsement. Practicing this single-loss-across-three-forms drill is the fastest way to lock in the named-versus-open distinction the exam leans on.