Causes of Loss - Special Form
The broadest ISO causes of loss form covering all risks of direct physical loss unless specifically excluded, shifting burden of proof to the insurer.
What It Is
The Causes of Loss - Special Form (CP 10 30) is the broadest of the three standard ISO causes of loss forms and is the most commonly recommended form for commercial property insurance. Unlike the Basic and Broad Forms which list covered perils (named-peril approach), the Special Form covers all risks of direct physical loss unless the cause of loss is specifically excluded or limited in the form.
This 'open peril' or 'all risk' approach is fundamentally different because it shifts the burden of proof. Under the Special Form, the insurer must prove that an exclusion applies to deny a claim, rather than the insured having to prove a named peril caused the loss. This provides significantly broader protection and fewer coverage disputes.
The Special Form still contains important exclusions including flood, earthquake, governmental action, nuclear hazard, utility service interruption, war, and mechanical breakdown. It also excludes wear and tear, rust, corrosion, smog, settling, cracking, insects, animals, and other gradual deterioration causes. These exclusions can be addressed through separate policies or endorsements.
Why It Matters for Brokers
The Special Form should be the default recommendation for virtually every commercial property account. Brokers who place clients on the Basic or Broad Form without clearly justifying the choice and documenting the client's informed consent face significant E&O exposure. The premium difference between Broad and Special Form is typically 10-20%, a modest cost for dramatically broader coverage.
Real-World Example
A manufacturing facility insured on the Special Form discovers $215,000 in damage caused by an employee accidentally leaving a water valve open overnight. Under the Basic Form, this loss would be denied (not a named peril). Under the Broad Form, it might be covered as water damage from an appliance, but the carrier could argue an open valve is not an appliance malfunction. Under the Special Form, the loss is covered because accidental discharge of water is not an excluded cause of loss. The insurer pays the full $215,000 minus the $5,000 deductible.
Common Mistakes
- 1Assuming the Special Form covers everything—it still excludes flood, earthquake, and other significant perils that require separate coverage.
- 2Not reviewing the Special Form's theft limitations, which may exclude theft by employees, mysterious disappearance, or theft from unattended vehicles.
- 3Failing to recommend the Special Form when it is available and affordable, defaulting to the Broad Form without adequate justification.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker defaults to recommending the Special Form for all commercial property policies and flags any policy using the Basic or Broad Form as requiring broker justification. The system generates a side-by-side comparison of all three forms showing coverage differences, helping brokers explain the value of the Special Form to cost-conscious clients.