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

Why a Separate Form

The BPP coverage form says what is covered and how much; the Causes of Loss form says which perils trigger payment. Commercial property uses three options: Basic (CP 10 10), Broad (CP 10 20), and Special (CP 10 30). Basic and Broad are named-peril forms — the insured must prove the loss came from a listed peril. Special is open-peril — everything is covered unless excluded, and the insurer bears the burden of proving an exclusion applies.

Basic Form (CP 10 10) — 11 Named Perils

Broad Form (CP 10 20) — Adds Coverage

Broad keeps 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

Special Form (CP 10 30) — Open Peril

Special covers all direct physical loss unless specifically excluded, so it picks up theft and many losses no named-peril form would. Because the insurer must prove an exclusion, Special offers the broadest protection and carries the highest premium.

Exclusions Common to All Three Forms

Picking the Right Form

Side-by-Side Comparison

The Anti-Concurrent-Causation Language

The forms state that excluded causes (such as flood or earth movement) are not covered regardless of any other cause that contributes to the loss. So if a flood and a covered windstorm jointly damage a building, the flood exclusion can bar the entire loss. This is why high-value or coastal accounts add separate flood and earthquake coverage rather than relying on the Special form alone.

Theft Sublimits Inside the Special Form

Open-peril does not mean unlimited. Special form imposes a $2,500 special sublimit on theft of certain property — furs, jewelry, watches, precious stones, and similar items — plus a separate limited dollar amount on theft of patterns, dies, and molds. Worked scenario: a jeweler suffers a $20,000 burglary of loose diamonds under a Special form with no added endorsement; recovery for those stones is capped at $2,500.

Common Traps

• Theft is the single most-missed item: Basic AND Broad exclude it; only Special covers theft.
• Water damage ≠ flood. Internal pipe leaks can be covered (Broad/Special); rising surface water never is.
• A building vacant more than 60 consecutive days loses vandalism, water-damage, theft, glass, and sprinkler-leakage coverage and takes a 15 percent loss penalty on other perils.
• Open-peril does not mean unlimited — theft of jewelry/furs carries the $2,500 special sublimit.

Named-Peril vs. Open-Peril: Who Proves What

The practical difference between the forms is the burden of proof, and exam writers test it constantly. Under Basic and Broad (named-peril), the insured must show the loss was caused by a peril on the list; if the cause is unknown or unlisted, there is no coverage. Under Special (open-peril), coverage is presumed and the insurer must point to a specific exclusion to deny.

A classic stem: machinery is found damaged but nobody knows how. Under named-peril, the insured cannot tie the loss to a listed peril, so it is denied; under Special, the insurer cannot prove an exclusion, so it pays. This single shift in burden is why Special commands the highest premium and why high-value or hard-to-foresee operations almost always choose it.

Vacancy: The 60-Day Rule

Vacancy is one of the heaviest-tested traps in commercial property. A building is vacant when it does not contain enough business personal property to conduct customary operations. Once a building is vacant for more than 60 consecutive days, the policy reacts in two ways:

• No coverage at all for vandalism, sprinkler leakage (unless heat was maintained or the system drained), building glass breakage, water damage, and theft or attempted theft.
• A 15 percent reduction in the loss payment for any other covered peril, such as fire or windstorm.

Worked scenario: a manufacturer mothballs a plant; 75 days later a fire causes a $200,000 loss. Because the building was vacant beyond 60 days, the recovery is cut by 15 percent — $200,000 × 0.85 = $170,000 before the deductible. Vacancy under construction or renovation is treated differently, and a building under active construction is not considered vacant.

Specified-Causes-of-Loss Shortcut

Some endorsements and other forms reference "specified causes of loss" — a defined shortcut for fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, leakage from fire-extinguishing equipment, sinkhole collapse, volcanic action, falling objects, weight of snow/ice/sleet, and water damage. Recognizing this phrase keeps you from confusing it with full open-peril coverage; it is essentially the Broad-form peril set used as a coverage trigger elsewhere in the program.