Insurance Forms, Perils, and Policy Terms: Comprehensive Property Coverage

Causes of Loss Forms

The three types are Basic, Broad, and Special.

Basic Form

Covers only perils specifically listed (named perils).

Broad Form

Covers Basic Form perils plus additional named perils.

Special Form

Covers all risks unless specifically excluded (open perils).

Named Perils Approach

Only listed perils are covered.

Open Perils Approach

All risks covered unless excluded.

Burden of Proof (Basic/Broad)

Insured must prove loss is from covered peril.

Burden of Proof (Special Form)

Insurer must prove loss is excluded.

Direct Physical Loss

Actual physical damage to property.

Proximate Cause

The cause that starts the chain of events leading to loss.

Anti-Concurrent Causation

Exclusions apply even if covered causes contribute.

Basic Form Perils

Fire lightning explosion windstorm hail smoke aircraft vehicles riot civil commotion vandalism sprinkler leakage sinkhole collapse volcanic action.

Broad Form Additional Perils

Falling objects weight of snow ice sleet water damage collapse.

Basic/Broad Exclusions

Ordinance law earth movement flood war nuclear hazard utility services fungus government action.

Flood

Not covered unless separate policy or NFIP.

Earthquake

Not covered unless endorsement added.

Special Form Advantage

Covers all risks except exclusions.

Special Form Burden

Insurer must prove exclusions apply.

BPP

Building and Personal Property Policy.

BPP Major Parts

Covered property property not covered additional coverages conditions optional coverages.

Occurrence

A single event causing loss.

Specific Insurance

Each item has its own limit.

Blanket Insurance

One limit covers multiple properties.

Blanket Advantage

Can recover full limit for one loss.

Deductible Rule

Subtracted from loss not from policy limit.

Loss Payment Formula

Loss minus deductible equals payment.

Coinsurance

Requires insured to carry a % of property value.

Coinsurance Purpose

Ensures insurance to value.

Coinsurance Formula

Did divided by Should times Loss minus Deductible.

No Coinsurance Penalty

When required insurance amount is met.

Actual Cash Value

Replacement cost minus depreciation.

Replacement Cost

Cost to replace property new.

Selling Price

Value of sold inventory not delivered.

Optional Coverages

Agreed value inflation guard replacement cost extension to others property.

Misrepresentation

Providing false information.

Concealment

Failing to disclose important information.

Fraud

Can void policy.

NFIP

National Flood Insurance Program.

Flood Definition

Temporary flooding of normally dry land.

Layered Insurance

Multiple policies stacked for coverage.

Layer Advantage

Higher limits and flexibility.

Peak Season Endorsement

Adjusts for seasonal inventory increases.

Murphy Windstorm

Covered.

Murphy Flood

Not covered.

Murphy Vandalism

Covered.

Murphy Earthquake

Not covered.

BPP Deductible Applied

Subtracted after determining loss.

John Loss 800

No payment.

John Loss 25000

24000 paid.

John Loss 415000

399000 paid.

Coinsurance Adequate Insurance

Full loss minus deductible.

Coinsurance Underinsured

Partial payment using ratio.

Special Form Key Benefit

Broadest coverage and insurer has burden of proof.