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

Three Forms, Three Levels of Protection

The BPP says nothing about which perils are insured. That job belongs to a Causes of Loss form, attached to the coverage part. ISO publishes three (plus an Earthquake form):

• Basic Form (CP 10 10) — a named-peril form covering a fixed list.
• Broad Form (CP 10 20) — Basic plus several additional named perils.
• Special Form (CP 10 30) — open-peril ('all-risk'): covers direct physical loss unless specifically excluded.

The key conceptual difference: under named-peril forms (Basic, Broad) the insured must prove the loss was caused by a listed peril. Under the Special open-peril form the burden shifts to the insurer to prove an exclusion applies. That burden shift is the single most-tested idea in this section.

Premium follows breadth of coverage. The Special form costs the most because it covers the widest range of perils and shifts the proof burden to the insurer; Broad costs more than Basic; Basic is the cheapest and narrowest. When a stem asks which form gives the broadest protection for the highest premium, the answer is always Special.

What Each Form Adds

A mnemonic for the eleven Basic perils is sometimes taught, but the exam rewards knowing the three Broad add-ons (falling objects, weight of snow/ice/sleet, water damage) because a stem will describe one of those and ask whether Basic responds. Basic does not cover them; Broad and Special do.

A few precision points the test exploits. Vandalism is covered by Basic, but theft is not — theft only comes with the Special form (and even then is limited). The Water Damage peril added by Broad covers accidental discharge from plumbing or appliances; it does not cover flood or surface water, which remain excluded on every form. Collapse is not a peril at all but an Additional Coverage that requires an enumerated cause (such as hidden decay or weight of contents), so a building that simply settles over time is not a covered collapse.

Special Form Exclusions and Limitations

Because the Special form covers everything not excluded, the exclusions carry the weight. Standard property exclusions include:

• Ordinance or Law (cost of complying with building codes)
• Earth Movement (earthquake, landslide) and Flood (Water exclusion)
• Governmental Action, Nuclear Hazard, War, Utility Failure
• Wear and tear, deterioration, mechanical breakdown, smog, rust, corrosion (maintenance items)
• Dishonest acts of the insured

Special-form limitations cap recovery on certain items (for example $2,500 for theft of furs, jewelry, or precious stones; theft of building glass) and require special handling for property in transit.

Tested trap: flood and earthquake are excluded by all three Causes of Loss forms; they require a separate flood policy (NFIP) or an Earthquake Causes of Loss form (CP 10 40).

Two exclusion doctrines deserve extra attention. The anti-concurrent-causation language says that an excluded peril is excluded even when a covered peril contributes to the same loss in any sequence — so if flood and wind both damage a roof, the flood portion stays excluded. The ensuing-loss exception works the other way: although a cause like faulty workmanship is excluded, if it leads to a covered peril such as fire, the resulting fire damage is paid. Expect a stem that chains two causes and asks what is covered.

Applying the Forms in Practice

Producers select a Causes of Loss form by weighing the client's risk tolerance against premium. A landlord with simple, well-maintained buildings might accept the Basic form to control cost, while a manufacturer with valuable, hard-to-replace stock almost always wants the Special form so it does not have to argue that a loss fell within a named peril.

Remember that the Causes of Loss form attaches to a specific coverage form and location. A multi-location CPP can carry Special on a flagship store and Basic on a low-value warehouse. Likewise, a policy can be written 'Special on building, Broad on contents,' so a single exam scenario may mix forms across categories.

Finally, the Special form still contains limitations, not just exclusions. Theft of jewelry, furs, and precious stones is capped (commonly $2,500), property in transit and missing-property/inventory-shortage losses face restrictions, and certain types of damage (such as marring or scratching) need the loss to be from a covered cause. Open-peril does not mean unlimited — it means broad, subject to a written list of exclusions and limitations the insurer must invoke.

One more practical layer: the Earthquake and Volcanic Eruption form (CP 10 40) can be added to restore coverage the standard forms exclude, and flood is handled separately through the National Flood Insurance Program or a private excess-flood market. Because catastrophe perils are excluded across Basic, Broad, and Special alike, a producer in a quake- or flood-prone region must affirmatively add them. The exam frequently tests whether a candidate knows these perils are never simply 'included' by upgrading from Basic to Special — the upgrade broadens ordinary perils, not catastrophe perils.