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

Coverage Forms Need a Perils Form

The BPP (CP 00 10) and other commercial property coverage forms describe what property is covered but say nothing about which perils trigger payment. A separate Causes of Loss form supplies the perils, and choosing among the three is one of the most important coverage decisions on a commercial account. Three are standard:

There is also an Earthquake causes-of-loss form (CP 10 40) added separately. The single most-tested distinction is named-peril versus open-peril: under named-peril forms (Basic, Broad) the insured must prove a listed peril caused the loss; under the open-peril Special form, the loss is covered unless the insurer proves an exclusion applies. That shift in burden of proof is what makes Special the broadest and most expensive option.

Basic Form (CP 10 10) — Named Perils

The Basic form covers these named perils. A useful mnemonic is FLEE WAVeS SH loosely, but the standard list is:

1. Fire
2. Lightning
3. Explosion
4. Windstorm or hail
5. Smoke
6. Aircraft or vehicles
7. Riot or civil commotion
8. Vandalism
9. Sprinkler leakage
10. Sinkhole collapse
11. Volcanic action

Because it is a named-peril form, the insured bears the burden of proof to show that a covered peril caused the loss. Theft is not included.

Broad Form (CP 10 20) — Basic Plus Three

The Broad form covers everything in Basic plus the "Big Three":

1. Falling objects
2. Weight of snow, ice, or sleet
3. Water damage (accidental discharge or leakage from plumbing, heating, A/C systems)

Broad also adds Collapse as an additional coverage (for specified causes such as hidden decay or weight of contents). Like Basic, it is still named-peril and still excludes theft.

Special Form (CP 10 30) — Open Peril

The Special form is open-peril (all-risk): it covers direct physical loss from any cause not specifically excluded. This reverses the burden of proof — the insured need only show a fortuitous direct physical loss, and the insurer must then prove an exclusion or limitation applies to deny the claim.

Key advantages of Special:

• Theft is covered — it is the only standard causes-of-loss form that includes theft.
• Broadest protection with the fewest coverage arguments for the insured.
• Highest premium of the three forms, reflecting the broader grant.

Special still applies sub-limits to certain easily-stolen property — such as furs, jewelry, watches, precious metals, and patterns/dies/molds — and it excludes the broad catastrophe and maintenance categories listed below. Even though it is called "all-risk," that label is misleading: the exclusions are extensive, which is exactly why flood and earthquake still need separate coverage.

Exclusions Common to the Forms

All three forms exclude a similar core list (Special's exclusions matter most because everything not excluded is covered):

Flood and earthquake are the two catastrophe perils almost always needing separate coverage.

Collapse, Earthquake, and the "All-Risk" Misnomer

The Broad and Special forms add Collapse as an additional coverage for specified causes (hidden decay, hidden insect/vermin damage, weight of people or property, defective construction during building). Earthquake and flood are never in the standard three forms; earthquake uses the separate CP 10 40 form and flood comes from the NFIP or private market. Calling the Special form "all-risk" is misleading - its exclusions (earth movement, flood, war, nuclear, ordinance or law, wear and tear) are extensive.

Trap: "Open peril" means covered unless excluded - the long exclusion list is exactly why catastrophe perils still need separate coverage despite the broad grant.

Choosing the Form on Price and Burden of Proof

The three forms trade breadth for premium, and the choice is an underwriting and sales decision the exam tests:

Only the Special form includes theft and shifts the burden of proof to the insurer. The insured saves premium with Basic/Broad but accepts the obligation to prove a listed peril caused the loss.

Trap: Under named-peril (Basic/Broad) the insured proves a covered peril; under open-peril (Special) the insurer proves an exclusion. Reverse these and you lose the question - this burden-of-proof direction is the single most-tested causes-of-loss point.