Open Perils Coverage
A property coverage form that insures against all causes of loss except those specifically excluded, also called Special Form.
What It Is
Open Perils Coverage, also called Special Form or All Risk, is a commercial property insuring agreement that covers direct physical loss to covered property from any cause not specifically excluded by the policy. The standard ISO form is CP 10 30, the Causes of Loss Special Form, which is the most common cause of loss form in commercial property programs.
Under Open Perils, the burden of proof shifts to the carrier: the insured must show direct physical loss, and then the carrier must point to a specific exclusion to deny coverage. This contrasts with Named Perils forms (CP 10 10 Basic and CP 10 20 Broad), where the insured must prove the loss arose from one of the listed causes such as fire, lightning, windstorm, or vandalism.
Common Special Form exclusions include flood, earthquake, war, nuclear hazard, government action, ordinance or law, and various boilers, machinery, and electrical breakdowns absent equipment breakdown coverage.
Why It Matters for Brokers
For brokers placing commercial property, recommending Special Form versus a Named Perils form materially changes claim outcomes. Open Perils responds to mysterious disappearance, unusual water events that are not flood, accidental impact, and other unanticipated causes that Named Perils would not reach. The premium difference is often modest, but the coverage differential can be enormous after a loss. Brokers must also verify which Special Form exclusions have been bought back through endorsements such as flood, earthquake, equipment breakdown, or ordinance or law, since clients commonly assume Open Perils means truly all perils.
Real-World Example
A regional retailer suffers $310,000 in damage when an upstairs HVAC condensate line fails over a weekend, soaking inventory and ceiling tiles. The cause is neither named nor a sudden burst pipe in the traditional sense. Because the policy is written on CP 10 30 Special Form with no excluded condition matching the event, the carrier accepts the claim under Open Perils logic. A Named Perils CP 10 20 Broad Form policy might have produced a coverage dispute over whether the loss qualified as accidental discharge.
Common Mistakes
- 1Marketing Special Form as all risk without explaining the exclusions, leading to client surprise when flood, earth movement, or ordinance and law losses are denied.
- 2Failing to add equipment breakdown, ordinance or law, and flood or earthquake endorsements where exposures warrant, leaving meaningful gaps inside an Open Perils program.
- 3Quoting Named Perils to save premium without documenting the recommendation against Special Form, which creates E&O exposure when the client suffers an excluded-cause loss.
- 4Overlooking theft sublimits, mysterious disappearance limitations, or seasonal property restrictions that exist within Open Perils forms despite the broad insuring agreement.
How brokerageaudit.com Handles This
Policy Checker confirms the cause of loss form on the issued policy matches the binder, and flags any switch from CP 10 30 to a more restrictive Named Perils form. Renewal Manager tracks which buy-back endorsements such as flood, earthquake, and equipment breakdown are in place across each property location.