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

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. The causes-of-loss choice is the largest 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 a listed peril.

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 loss)
• 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 Businessowners building coverage (Section 9.5).

Exclusions Common to All Three Forms

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

Additional Special-Form Exclusions

The Special form also excludes wear and tear; rust, corrosion, decay; mechanical breakdown; settling, cracking, shrinking; insect, bird, or rodent damage; fungus and wet or dry rot; 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 lists no water damage and pays nothing. If instead a river overflows into the store, no form pays - that is flood, requiring a separate flood policy.

Anti-Concurrent-Causation

The exclusions begin with anti-concurrent-causation language: excluded perils are excluded "regardless of any other cause or event that contributes concurrently or in any sequence." If flood (excluded) and wind (covered) combine, the portion from flood is still excluded. Adjusters use this to split hurricane losses between covered wind and excluded storm surge.

Collapse and Special Sublimits

Under the Broad and Special forms, collapse is an additional coverage triggered only by specified causes such as hidden decay or hidden insect damage; mere settling or cracking is not collapse. Even where the Special form covers theft, certain property carries special limits: typically $2,500 for furs, $2,500 for jewelry and watches, and $250 for theft of stamps, tickets, and letters of credit.

Choosing the Right Form

The form decision balances premium against breadth, and the exam often frames it as a scenario.

Because the Special form covers anything not excluded, it picks up oddball losses a named-peril form would never list - a forklift puncturing a wall, paint accidentally spilled across stock, or a contractor dropping a tool through a skylight. That breadth is exactly why it commands the highest premium and why the study focus shifts from inclusions to exclusions.

How Adjusters Apply the Forms

Under Basic and Broad, the insured must first prove a listed peril caused the loss before the claim proceeds; under Special, the insured shows direct physical loss and the insurer must point to an exclusion. This reversal changes claim outcomes in borderline cases - an unexplained but sudden loss is more likely paid under Special and more likely denied under a named-peril form. Producers therefore steer clients with unpredictable exposures toward Special and budget-driven clients toward Basic.

Common Traps

• Theft is the single most-missed item: Basic excludes it, Broad and Special cover it.
• Water damage is not 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 losses are cut 15 percent.
• Open-peril does not mean unlimited - jewelry and fur theft carry $2,500 special sublimits.