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

The three Causes of Loss forms

The BPP coverage form lists what property is covered; a Causes of Loss form attaches to state which perils are covered. ISO offers three, in ascending order of breadth and price:

• Basic Form (CP 10 10) — a named-peril list.
• Broad Form (CP 10 20) — the Basic list plus a few more named perils.
• Special Form (CP 10 30) — open-peril ("all-risk"): covers all direct physical loss except what is excluded.

Without one of these, the BPP provides no coverage. The selected form is shown on the declarations and drives both coverage and premium.

What each form adds

Basic Form (CP 10 10) covered causes of loss — remember the mnemonic perils:

• Fire, Lightning, Explosion, Windstorm or Hail, Smoke, Aircraft or Vehicles, Riot or Civil Commotion, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action.

Broad Form (CP 10 20) = all Basic perils plus:

• Falling objects; Weight of snow, ice, or sleet; Water damage (accidental discharge/leakage); and Collapse (as an additional coverage from specified causes).

Special Form (CP 10 30) covers any direct physical loss unless excluded or limited. It shifts the burden of proof to the insurer to show an exclusion applies, whereas under Basic/Broad the insured must prove the loss came from a listed peril.

Exclusions and special limits (Special Form)

Open-peril is not unlimited. Standard exclusions in all three forms include: ordinance or law, earth movement, governmental action, nuclear hazard, utility services failure, war, water (flood/surface water/sewer backup), and "wear and tear / deterioration." The Special Form also adds exclusions for things like dishonest acts by the insured and certain pollution.

The Special Form imposes special limits on theft-prone property, e.g.:

• $2,500 for furs, jewelry, watches, precious stones (theft).
• $2,500 for patterns, dies, molds, forms.
• $2,500 for stamps, tickets, letters of credit.

Trap: a flood washes out inventory. Even under Special Form, the water exclusion bars the claim — "all-risk" never means "all perils." Flood requires a separate policy (NFIP or DIC).

Reading the perils carefully

Several named perils carry definitional fine print the exam loves:

• Windstorm or Hail excludes loss to the interior of a building unless the wind/hail first creates an opening in the roof or walls (the "opening" rule). It also excludes damage to certain outdoor property.
• Vehicles as a peril excludes damage caused by a vehicle owned or operated by the insured or by an occupant of the described premises.
• Smoke excludes smoke from agricultural smudging or industrial operations.
• Vandalism excludes loss from theft (except damage to the building caused by burglars breaking in) and excludes glass breakage other than as covered separately.
• Sinkhole Collapse covers sudden sinking into man-made underground openings only in limited form; mine subsidence is excluded and bought back by endorsement in affected states.

Understanding these carve-outs explains why two adjusters can reach different conclusions on the same storm: the cause-of-loss chain (proximate cause) determines coverage.

Anti-concurrent causation and ordering perils

All three forms use an anti-concurrent causation lead-in for the major exclusions (earth movement, flood, ordinance/law, etc.): the loss is excluded "regardless of any other cause or event that contributes concurrently or in any sequence to the loss." This language was written after courts split over hurricanes where wind (covered) and flood (excluded) acted together.

Exam application: a hurricane's storm surge (flood) and its wind both damage a store. Under anti-concurrent causation, the flood-caused damage stays excluded even though a covered peril (wind) also operated. The insured recovers only for damage that wind alone caused, which is why coastal businesses pair a Special Form property policy with separate flood and windstorm coverage. Recognizing this distinction — covered peril vs. excluded peril vs. concurrent causation — is one of the most heavily tested commercial property concepts.

Matching the Causes-of-Loss Form to the Risk

Commercial property separates the what is covered (BPP form) from the which perils (Causes of Loss form). Three options exist: Basic (CP 10 10) lists fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot, vandalism, sprinkler leakage, sinkhole, and volcanic action. Broad (CP 10 20) adds falling objects, weight of ice/snow/sleet, water damage, and limited collapse. Special (CP 10 30) is open peril — all direct physical loss except what is excluded — and is the broadest and most exam-recommended.

The proof-burden flip is the key exam point: under named-peril forms the insured must show a covered cause; under the Special form the insurer must prove an exclusion to deny — which is why Special is the most favorable to the policyholder.