Which of the following perils are covered in the cause of loss basic form?

Prior to working in the insurance industry, I purchased insurance because I had to. I did not really understand the ins and outs of what I was purchasing or exactly what risks it would or would not protect me from. An insurance policy can be intimidating and sometimes confusing, but it is important to understand your coverage prior to a loss rather than after the damage is done to avoid unexpected gaps. There are three commercial property forms (basic, broad and special) that identify the causes of loss (or perils) for which coverage is provided. The basic and broad causes of loss forms are named peril forms whereas the special cause of loss form is an opened peril form. The named peril form provides coverage for losses caused by only those specifically listed while the open peril coverage form is an all risk form that provides coverage for losses by any cause unless it is specifically excluded.

Please give your agent a call today if you have any questions on the coverage forms within your policy.

This edition of Insurance Straight Talk is for owners and tenants of residential and commercial property in Connecticut.

When securing Connecticut property insurance coverage, whether for a personal or commercial market risk – e.g., Homeowners (HO-3), Dwelling Fire (DP-1 or DP-3), or Commercial Property – you generally have a choice of three levels of coverage: Basic, Broad, and Special.

Basic Form policies are the least comprehensive, and cover you for named perils, including:

• Fire
• Lightning (natural electricity)
• Windstorm or Hail
• Explosion (no coverage for bursting pipes or rupture of pressure relief devices)
• Smoke (sudden and accidental loss or damage – no coverage for agricultural smudging or industrial smoke)
• Riot or civil commotion
• Vandalism or malicious mischief
• Vehicles or aircraft
• Volcanic action (excludes removal of ash or other debris that does not cause direct damage)
• Sinkhole collapse (excludes cost of filling or collapse into man-mad underground cavities

If the peril is not specifically listed, there is no coverage.

Broad Form policies are more extensive in coverage as they include all the perils of the Basic Form plus:

• Weight of Snow, Ice, or Sleet
• Water Damage
• Falling Objects
• Glass Breakage
• Building Collapse

Special Form policies are the most inclusive and read differently than Basic and Broad Form.  That is, Special Form policies include coverage for direct loss from all perils unless they are specifically excluded.  The exclusions are:

• Ordinance or Law
• Earth Movement
• Government Action
• Nuclear Hazard
• Utility Services
• War Military
• Artificially Generate Current
• Rupture or Bursting of Water Pipes
• Steam Boilers
• Mechanical Breakdown

Additional Special Form exclusions include:

• Artificially generated electrical current**
• Delay, loss of use, or loss of market
• Smoke, vapor, or gas from agricultural smudging or industrials operation
• Wear and tear*
• Rust, corrosion, fungus, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself*
• Smog*
• Settling, cracking, shrinking, or expansion*
• Birds, vermin, rodents, and insects*
• Mechanical Breakdown*
• The following causes of loss to personal property*: dampness or dryness of atmosphere; changes in or extremes of temperature; and marring or scratching
• Seepage
• Plumbing, heating, or air conditioning systems – damage from water, other liquids, powder, or molten material that leaks or flows from plumbing, heating, air conditioning, or other equipment (except fire protective systems) cause by or resulting from freezing, unless: you do your best to maintain heat in the building or structure; or you drain the equipment and shut off the supply if the heat is not maintained
• Dishonesty
• Fraud
• Rain, snow ice, or sleet damage to personal property in the open
• Pollutants (unless discharge, dispersal, seepage, migration, release, or escape results from specified cause of loss*

**If artificially generated electricity results in fire, the damage caused by the fire would be covered

*If a specified cause of loss or building glass breakage results from any one of the exclusions identified by an asterisk, the company will pay for the damage cause by the specified causes of loss or building glass breakage

Basic, Broad, and Special form are three common coverage forms when insuring property.  Basic form is the most restrictive, while Special offers the greater level of protection.

Basic form covers these 11 “perils” or causes of loss:  Fire or Lightning, Smoke, Windstorm or Hail, Explosion, Riot or Civil Commotion, Aircraft (striking the property), Vehicles (striking the property), Glass Breakage, Vandalism & Malicious Mischief, Theft, and Volcanic Eruption. 

Broad form covers the same 11 perils, but adds 6 more:  Falling objects, Weight of ice, snow or sleet, accidental discharge or overflow of water or stream from within plumbing or related systems; does not include discharge or overflow of water from a sump,  sudden and accidental rupture of heating, air conditioning, fire protective sprinkler, or hot water heating system.  Freezing of plumbing or related systems.  And Sudden and accidental damage from artificially generated electrical current.

Special form does not specifically list perils, rather it is “all risk” coverage unless otherwise specifically excluded.

As always refer to your actual policy for coverage language as it could vary slightly from carrier to carrier, and product to product.

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