Causes of Loss - Basic Form
The most restrictive ISO causes of loss form covering only fire, lightning, explosion, windstorm, hail, smoke, and a few other named perils.
What It Is
The Causes of Loss - Basic Form (CP 10 10) is the most restrictive of the three standard ISO causes of loss forms used with the Building and Personal Property Coverage Form. It provides coverage for only eleven named perils: fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.
The Basic Form places the burden of proof on the insured to demonstrate that a covered peril caused the loss. If the cause of loss does not match one of the eleven listed perils, there is no coverage. Water damage, theft, falling objects, weight of ice and snow, and many other common causes of loss are not covered under the Basic Form.
The Basic Form is rarely used for commercial accounts with significant property exposure because its limitations create too many coverage gaps. It is sometimes used for lower-value properties, vacant buildings, or properties with underwriting challenges that prevent placement on broader forms.
Why It Matters for Brokers
Brokers should avoid the Basic Form for most commercial accounts because its narrow coverage frequently results in denied claims for common perils like water damage and theft. When a carrier offers only the Basic Form, the broker must clearly communicate the coverage limitations to the client and document the discussion. Using the Basic Form without proper client disclosure is an E&O risk.
Real-World Example
A warehouse insured on the Basic Form suffers $125,000 in water damage when a municipal water main breaks and floods the building. The Basic Form does not cover water damage from external sources. The claim is denied. If the same property had been insured on the Broad Form (which covers water damage from certain sources) or the Special Form (which covers all risks not specifically excluded), the claim would have been covered. The annual premium difference between Basic and Special Form for this property was only $1,800.
Common Mistakes
- 1Not clearly disclosing to the client that common perils like water damage, theft, and falling objects are excluded under the Basic Form.
- 2Defaulting to the Basic Form to save premium without presenting the Broad or Special Form alternatives and documenting the client's informed decision.
- 3Assuming the Basic Form covers theft—it does not, and theft is one of the most common commercial property losses.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker identifies when the Basic Form is attached to a commercial property policy and generates a coverage limitation warning. The system requires broker acknowledgment that the client has been informed of the Basic Form's restrictions before the policy review is marked complete. The platform also calculates the premium differential to upgrade to the Broad or Special Form.