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

What Triggers Coverage

A BPP says WHAT is covered; a Causes of Loss form says WHICH perils trigger payment. ISO offers three, in ascending breadth:

• Basic — CP 10 10
• Broad — CP 10 20
• Special — CP 10 30

Basic and Broad are named-peril forms: a peril must be listed to be covered, and the insured bears the burden of proving the loss was caused by a listed peril. Special is an open-peril (formerly 'all-risk') form: every direct physical loss is covered UNLESS specifically excluded, and the burden shifts to the insurer to prove an exclusion applies. The burden-of-proof shift is one of the most tested concepts in this section.

Basic Form Perils (CP 10 10)

The Basic form covers eleven named perils. A common mnemonic groups them as fire-related and the rest:

Note that Basic includes fire, lightning, explosion, and windstorm but NOT water damage, glass breakage, or falling objects.

Broad Form Adds (CP 10 20)

The Broad form includes all eleven Basic perils PLUS:

• Falling Objects
• Weight of Snow, Ice, or Sleet
• Water Damage (accidental discharge/leakage of water from a system — but NOT continuous/repeated seepage)
• Collapse (as an Additional Coverage, from specified causes such as hidden decay, hidden insect/vermin damage, weight of contents, use of defective materials)
• Breakage of Building Glass (limited)

The Broad form's water damage is sudden and accidental only; flood and surface water remain excluded everywhere and require separate flood coverage (NFIP or private).

Choosing a Causes-of-Loss Form and the Burden It Sets

The causes-of-loss form is bolted onto the BPP and decides what perils and who proves what.

Exam trap: Theft is covered only on the Special form. Basic and Broad never cover theft. Flood and earth movement are excluded on all three and need separate coverage (DIC or NFIP).

Special-Form Exclusions and Limitations

The Special form excludes the usual list - ordinance or law, earth movement, flood, war, nuclear, wear and tear, and certain water - and limits some perils (theft of certain property, dishonesty, and a sublimit on property in transit). A Difference-in-Conditions (DIC) policy is frequently bought alongside to buy back flood and earthquake, filling the Special form's largest gaps for a single combined limit.

Ensuing Loss, Collapse, and the Water Carve-Outs

Even on the Special form, the exclusions carry givebacks the exam tests. An ensuing-loss clause restores coverage for a covered peril that results from an excluded one: faulty construction is excluded, but a fire or water discharge that ensues from it is covered. Collapse is not a covered cause of loss in its own right but an additional coverage triggered only by specified causes (hidden decay, vermin, weight of people/property, defective construction during construction).

Exam trap: The Special form excludes flood and surface water but covers sudden, accidental water discharge from a plumbing system. "Water damage" is not one idea - where the water came from decides coverage.

The form also excludes water that backs up through sewers or drains unless a back-up endorsement is added, and excludes seepage over 14 days, treating slow leaks as maintenance rather than fortuitous loss. Matching the water source to the right exclusion or giveback is the single most-tested skill on commercial property water claims.

Special Form (CP 10 30): Open Peril and Its Exclusions

Under CP 10 30, the insured need only show direct physical loss; the insurer must prove an exclusion. Key exclusions fall into two groups.

Concurrent-causation (anti-concurrent) exclusions — excluded even if a covered peril contributes: ordinance or law, earth movement (earthquake/landslide), governmental action, nuclear hazard, utility services (off-premises power), war, water (flood/surface water/sewer backup), and 'fungus/wet rot/dry rot/bacteria.'

Loss-condition / partial exclusions — excluded but with exceptions: artificially generated electrical current, smoke from agricultural smudging, wear and tear/deterioration, rust/corrosion/decay, settling/cracking, insects/birds/rodents, mechanical breakdown, and dishonest acts by the insured. A notable carve-back: even though wear-and-tear is excluded, ensuing 'specified causes of loss' (like a fire that results) ARE covered.

Theft and the Special Form

A major reason businesses buy the Special form is theft coverage — theft is covered under Special (subject to the BPP's $2,500 special internal limits and exclusions like dishonesty by the insured or employees, and shortage found only at inventory). Theft is NOT a Basic or Broad named peril (vandalism is, but vandalism is not theft). Exam scenarios frequently contrast a burglary loss under a Broad form (no coverage for the stolen goods) versus the Special form (covered, subject to limits).