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

Three Forms, Two Coverage Triggers

A BPP says what is insured but is silent on perils until a Causes of Loss form is attached. ISO offers three, escalating in breadth and price:

• Basic Form (CP 10 10) — named perils
• Broad Form (CP 10 20) — more named perils
• Special Form (CP 10 30) — open perils ("all risk")

The pivotal distinction the exam hammers: named-peril forms (Basic and Broad) cover a loss only if the cause is on the list, and the burden of proof is on the insured to show the loss came from a listed peril. The Special Form is open-peril, covering any cause not specifically excluded, and the burden of proof shifts to the insurer to show an exclusion applies. That burden shift is why Special costs more and is the single most-tested concept here.

A related distinction is breadth of recovery. Because the Special Form starts from "everything is covered unless excluded," it picks up oddball causes a named-peril list never anticipated — a forklift puncturing a wall, paint accidentally sprayed on stock, an animal entering the premises. Under a named-peril Broad Form, those same losses are denied because no listed peril matches. When a question describes an unusual, hard-to-categorize cause of loss, the answer almost always turns on whether the Special Form was attached.

What Each Form Covers

Memory hook: Basic = "BR FACE V SS" (the 11 basic perils); Broad adds the three water/weather perils (falling objects, weight of ice/snow, water damage) plus glass breakage and collapse; Special adds theft and opens to all non-excluded causes.

Exclusions and Traps

All three forms share the major exclusions: ordinance or law, earth movement (earthquake), governmental action, nuclear hazard, utility services failure, war, water (flood, surface water, sewer backup), and "certain computer-related losses." Earthquake and flood are bought back by endorsement (CP 10 40 earthquake) or a separate flood policy.

A classic trap: a business suffers a theft loss but carries the Broad Form. The Broad Form does not cover theft — only the Special Form does — so the claim is denied. Another: under the Special Form, water damage from a burst pipe is covered (sudden discharge), but flood (surface water) is excluded on every form. Finally, remember the proof-burden flip: on a disputed Special Form loss, if the insurer cannot point to a specific exclusion, the loss is paid.

Some exclusions are absolute and others are pared back by exceptions. The water exclusion bars flood and sewer backup but does not bar sudden accidental discharge from a plumbing system, which is why a burst supply pipe is covered under Broad and Special but a backed-up municipal sewer is not (unless a sewer/drain backup endorsement is added). The collapse provision is treated as an Additional Coverage rather than a peril, so it carries its own conditions. Distinguishing a barred cause from a covered one inside the same general category is exactly the level of nuance the exam expects.

Choosing a Form and a Worked Comparison

Form selection trades premium for certainty. A low-hazard office with limited contents might accept the Basic Form to save premium; a retailer holding valuable stock and exposed to theft needs the Special Form. Consider two identical $300,000 stock losses from theft: under the Broad Form the insured recovers $0 (theft unlisted), while under the Special Form the insured recovers the loss less the deductible. The premium difference between the forms is almost always small relative to that swing, which is why agents document a Basic or Broad selection carefully.

Note also that the Special Form is required before certain coverage extensions and Replacement Cost settlements behave as expected, so downgrading to a named-peril form can quietly shrink coverage beyond just the peril list.

The Special Form's Coverage Extensions and the Theft Trap

Choosing the Special Form (CP 10 30) flips the coverage trigger to open-peril and unlocks additional benefits the Basic and Broad forms lack. Special-form coverage includes theft (with special limits on furs, jewelry, patterns, stamps, and tickets), and it adds limited coverage for property in transit and for the cost to research/replace lost records — extensions a named-peril form omits.

The Special Form's exclusions still bar earth movement, flood/water, ordinance or law, governmental action, nuclear hazard, war, and "utility services" off-premises, plus the maintenance group (wear and tear, rust, corrosion, hidden decay, vermin, mechanical breakdown). A heavily tested carve-back: collapse and ensuing losses (e.g., a fire that follows an excluded mechanical breakdown) remain covered. On the exam, if a stem mentions theft or mysterious disappearance, only the Special Form responds, because Basic and Broad never list theft as a covered peril.