Causes of Loss—Modifying Your Protection

Every insurance policy has perils that are covered and excluded. In Property insurance policies (E.g. your home, commercial building, etc.), the policy follows the ‘Cause of Loss Forms’. The Forms are Basic, Broad, and Special. Each Form insures your property against different perils, with Special being the most thorough coverage.

Note: Before the three Forms can be properly discussed, you’ll need to know what a Named Peril policy and an Open Peril policy mean. In a Named Peril policy, the coverage provided is limited to the perils that are specifically named. If something happens that isn't specifically named, the claim will be denied. Conversely, in an Open Peril policy, every claim scenario is covered except for named exclusions. So if a claim was caused by literally anything other than the named exclusions, it is covered.  

Basic:

As you’d expect from its title, the perils covered by Basic Causes of Loss are very limited. This Form is a  Named Peril coverage, covering your property for only the most basic perils. Typically, your Basic form will cover the following:

  • Fire
  • Lightning
  • Windstorm/Hail
  • Explosion
  • Smoke
  • Vandalism
  • Aircraft or Vehicle Collision
  • Riot or Civil Commotion
  • Sinkhole Collapse
  • Volcanic Activity

Broad:

Broad Form is another Named Peril coverage, expanding on the perils found in the Basic form. The Broad Form includes all of the Basic Form’s perils, and expands the coverage to include the following:

  • Burglary & Damage Caused by a Burglary
  • Falling Objects
  • Weight of Snow and Ice
  • Freezing of Plumbing
  • Accidental Water Damage
  • Artificially Generated Electricity

Special:

As you might have guessed, Special Form is written on an Open Peril basis, making it the most comprehensive coverage form. The biggest benefit to the Special Form is that it would cover odd, completely unforeseeable accidents that would otherwise be excluded in the other policy Forms. Being an Open Peril policy, the Special Form typically has the following exclusions:

  • Ordinance or Law* 
  • Power Failure*
  • Earthquake**
  • Flood**
  • Neglect
  • War
  • Nuclear Hazard
  • Intentional Acts

*These exclusions could be covered by adding an endorsement to the policy and paying additional premium.

**These exclusions can sometimes be added by endorsement or by purchasing a separate policy.

The bottom line:

Not all policies are made equally. Don't leave things up to chance—always make sure to check what coverage Form your property insurance is written on. When you compare insurance quotes, always make sure to take a look at the policy language—even two ‘Special Form’ policies could have different exclusions! 

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Colten Zamrzla, CPCU

Colten first started in the insurance industry in 2010. He then pursued a Bachelor's degree in Finance & Insurance from the University of Nebraska at Lincoln. Once graduated, he immediately started studying for the CPCU and achieved it in just shy of a year. He is solely focused on commercial insurance, able to assist all types of businesses and nonprofits in risk management.

Colten has dedication and passion for his clients and the insurance industry as a whole. He dedicates time to furthering his knowledge on all things business and insurance, and he volunteers for the Independent Insurance Agents of Nebraska, a state-based trade association.