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

Two Forms, One Policy: Coverage Plus Perils

A complete ISO commercial property policy always requires two forms working together:

1. Coverage form (CP 00 10 BPP) — defines what property is insured and how loss is settled.
2. Causes of Loss form — defines which perils trigger coverage.

The causes-of-loss selection is the single largest driver of premium and claims outcome. Nevada producers quoting a Henderson warehouse, a Reno tech startup, or a rural Nye County equipment dealer must match peril breadth to the client's dominant exposures. The P&C exam tests this pairing relentlessly because choosing Basic when the client needs Special is both an E&O event and a failing exam answer.

Named Peril Versus Open Peril: Burden of Proof

This burden shift is the most important conceptual distinction in commercial property. Named-peril forms start from no coverage unless the insured connects the dots. Open-peril forms start from full coverage unless the insurer identifies an exclusion or limitation.

Basic Form (CP 10 10) — Eleven Named Perils

The Basic Causes of Loss form (CP 10 10) is the narrowest commercial option. It covers only these 11 named perils:

Theft is NOT covered under the Basic form. A stem describing inventory stolen from a locked Las Vegas showroom on a Basic-form policy has no coverage unless a separate crime policy or endorsement applies.

Broad Form (CP 10 20) — Fourteen Named Perils

The Broad Causes of Loss form (CP 10 20) includes all 11 Basic perils plus three additional named perils:

Broad also adds limited collapse additional coverage (collapse from specified causes—not all collapse scenarios). Total: 14 named perils.

Theft remains excluded on Broad. Only the Special form covers theft of business personal property under standard causes-of-loss forms.

Special Form (CP 10 30) — Open Peril

The Special Causes of Loss form (CP 10 30) covers any direct physical loss unless the loss is excluded or limited in the form. This is open-peril coverage (sometimes marketed as "all-risk," though exclusions always exist).

Special is the broadest standard causes-of-loss option and the only one of the three that includes theft of business personal property without adding a separate crime form.

High-theft exposures—jewelry stores on the Strip, electronics retailers, cannabis dispensaries with inventory risk—require Special (or Special plus inland marine floaters for high-value sublimits).

Three-Form Comparison Table

Common Exclusions (All Three Forms)

Regardless of Basic, Broad, or Special, standard exclusions include:

• Flood and surface water (NFIP or private flood policy required)
• Earth movement—earthquake, landslide, subsidence (separate earthquake coverage)
• War, military action, and nuclear hazard
• Wear and tear, deterioration, rust, corrosion, hidden or gradual decay
• Intentional loss by the insured
• Ordinance or law (unless endorsed)—cost to comply with building codes during repair
• Fungus, wet rot, dry rot, and bacteria (limited exceptions may apply)
• Electrical disturbance to electronic data and systems (data itself excluded)

Flood and earthquake are never covered by any of the three standard causes-of-loss forms. Nevada clients in flash-flood zones and near seismic faults need separate policies or endorsements—labeling a policy "all-risk" does not change these exclusions.

The Vacancy Provision

The BPP Vacancy Provision is a heavily tested trap tied to causes-of-loss outcomes:

• A building is vacant when less than 31% of its total square footage is used for customary operations.
• When vacant for more than 60 consecutive days, coverage is suspended for: vandalism, sprinkler leakage, glass breakage, theft, and water damage.
• For all other covered causes of loss, the insurer pays only 85% of otherwise covered loss (a 15% reduction).

Tenant versus owner: For a tenant, only the rented unit's vacancy matters. For a building owner, the entire building's occupancy percentage determines vacancy.

Nevada scenario: A closed retail storefront on Fremont Street sits empty for 90 days between tenants. Vandals break windows and steal copper wiring. Even on the Special form, theft and vandalism are suspended after 60 days of vacancy; remaining covered perils (if any) pay at 85%.

Special Form Limitations and Sublimits

Open-peril does not mean unlimited. The Special form contains limitations capping or conditioning payment:

A high-value jewelry retailer on Special still buys inland marine floaters because BPP sublimits leave most inventory exposed.

Windstorm Interior Damage Trap

Under all three forms, interior damage from rain, snow, sleet, ice, sand, or dust is covered only if the wind or hail first damages the building and creates an opening through which the elements enter. Rain blowing through an already-open window is not covered. Exams describe water-stained inventory after a monsoon and expect you to ask whether wind created the opening.

Nevada Exam Scenarios

Reno electronics retailer: Primary exposure is shoplifting and after-hours burglary. Requires Special (CP 10 30)—Basic and Broad exclude theft.

Mount Charleston ski-rental shop: Roof collapses under heavy snow load. Requires at least Broad—weight of snow, ice, or sleet is not a Basic peril.

Las Vegas warehouse mystery leak: Water stains cartons; cause unknown. On Special, the insurer must identify an exclusion (e.g., gradual seepage over 14+ days) to deny. On Basic, the insured must tie loss to one of 11 perils—likely fails without evidence of sprinkler leakage or similar.

Carson City vacant office building: Empty 75 days. Sprinkler pipe freezes and floods the floor. Water damage is suspended during extended vacancy; even if another peril applied, payment would be at 85%.

Choosing the Right Form: Decision Logic

1. Does the client need theft coverage? → Special only (among standard COL forms).
2. Is snow/load or falling-object exposure material? → At least Broad.
3. Is premium the only concern on a fire-resistant, low-crime, owner-occupied shell? → Basic may suffice (rare in practice).
4. Is the building vacant over 60 days? → Expect vandalism, theft, water, sprinkler, and glass exclusions regardless of form.

Common Exam Traps

1. Theft requires Special—not Broad, not Basic.
2. Burden of proof flips between named peril and open peril.
3. Flood and earthquake are always excluded on all three forms.
4. Vacancy = 60 days, not 30 or 90.
5. "All-risk" marketing ≠ no exclusions—Special still has a long exclusion list.
6. Moving Basic to Broad adds named perils; moving to Special changes the entire peril philosophy.

Mastering Causes of Loss forms completes the commercial property picture you began with the BPP coverage form. On the Nevada exam, read the type of loss first, then match it to Basic, Broad, or Special before calculating limits or deductibles.