7.3 Causes of Loss Forms

Why a Separate Form

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

Basic Form (CP 10 10) — 11 Named Perils

The Basic form is named-peril: the insured must prove the loss came from one of these listed perils.

Note: theft is NOT a Basic-form peril.

Broad Form (CP 10 20) — Adds Coverage

The Broad form includes all 11 Basic perils and adds:

• Falling objects (exterior must be penetrated first for interior damage)
• Weight of snow, ice, or sleet
• Water damage — sudden, accidental discharge from plumbing, HVAC, or appliances (NOT flood)
• Breakage of building glass (limited)
• Collapse as an additional coverage from specified causes

Theft becomes covered at the Broad level.

Special Form (CP 10 30) — Open Peril

The Special form flips the logic: it covers all risks of direct physical loss EXCEPT those excluded. Because coverage is presumed, the burden of proof shifts to the insurer to show an exclusion applies. This is the broadest and most expensive form and is the basis for the Businessowners Policy building coverage (7.5).

Exclusions Common to All Three Forms

Flood and earthquake are never covered by any of the three forms. Flood needs a separate flood policy (often through the NFIP); earthquake needs the CP 10 40 earthquake endorsement.

Additional Special-Form Exclusions

The Special form also excludes wear and tear; rust, corrosion, decay; mechanical breakdown; settling, cracking, and shrinking; insect, bird, rodent, or animal damage; fungus, wet/dry rot; smog; faulty design or workmanship; and voluntary parting with property induced by trick or fraud.

Side-by-Side Comparison

Worked Scenario

A pipe bursts overnight and water ruins a retailer's inventory. The Broad and Special forms cover it as accidental discharge of water; the Basic form does not list water damage and pays nothing. If instead a river overflows into the store, no form pays — that is flood, requiring a separate flood policy.

The Anti-Concurrent-Causation Language

A subtle but tested feature of the exclusions is the anti-concurrent-causation lead-in: the excluded perils are excluded "regardless of any other cause or event that contributes concurrently or in any sequence to the loss." This means that if an excluded peril (say, flood) and a covered peril (say, wind) combine to cause damage, the portion attributable to the excluded peril is still excluded. Adjusters use this language to apportion hurricane losses between covered wind and excluded storm surge.

Collapse as a Special Additional Coverage

Under the Broad and Special forms, collapse is not a peril but an additional coverage triggered only by specified causes: a Causes of Loss peril; hidden decay; hidden insect or vermin damage; weight of people or personal property; weight of rain that collects on a roof; or use of defective material or methods during construction (if the collapse occurs during construction). Settling, cracking, shrinking, bulging, and expansion are not collapse. A building that merely cracks has no collapse claim; a roof that caves in from concealed rot does.

Picking the Right Form

Because the Special form covers anything not excluded, it picks up oddball losses — a forklift puncturing a wall, paint accidentally spilled across stock — that a named-peril form would never list. That breadth is exactly why it commands the highest premium and why exclusions, not inclusions, are the study focus.

Theft Sublimits Inside the Special Form

Even where the Special form covers theft, certain property carries special limits: typically $2,500 for furs, $2,500 for jewelry and watches (loss by theft), $2,500 for patterns and dies, and $250 for theft of stamps, tickets, and letters of credit. Candidates who assume open-peril means unlimited theft recovery on jewelry are walking into a classic trap.

Common Traps

• Theft is the single most-missed item: Basic excludes it, Broad and Special cover it.
• Water damage ≠ flood. Internal pipe leaks can be covered; rising surface water never is.
• A building vacant more than 60 consecutive days loses vandalism, water-damage, theft, glass, and sprinkler-leakage coverage, and other covered losses are cut 15 percent.
• Open-peril does not mean unlimited — theft of jewelry, furs, and similar property carries $2,500 special sublimits.