Named Perils vs. Special Form in a Commercial Property Policy

The Florida Department of Financial Services describes the Cause of Loss Form as a required component of commercial property coverage that specifies which perils are covered, with Basic, Broad and Special forms typically available. The Texas Department of Insurance describes three levels, each protecting against different causes of loss. It says broad form policies usually cover the basic form's causes plus leaking appliances, structural collapse, falling objects, and the weight of ice, sleet or snow.

The Texas Department of Insurance says most policies exclude flood, earth movement, war, nuclear disaster, wear and tear, and insects or vermin. It adds that most commercial property policies do not cover flood damage, so a separate flood policy, including one through the National Flood Insurance Program, is needed for that protection.

The California Department of Insurance notes that most commercial property policies exclude losses from boilers and machinery. It describes separate boiler and machinery coverage, marketed as systems breakdown, as one way to address that exposure. That is a California agency's description, not a rule for other states.

The Florida Department of Financial Services also says surplus lines insurers are not required to file forms and rates with the Florida Office of Insurance Regulation and that their forms may contain unique exclusions and conditions. In Florida, then, a surplus lines special form can differ from an admitted insurer's form, so the exclusions in the actual form control the comparison.

For each proposal, note the following:

1. Which cause of loss form (Basic, Broad or Special) is attached, and its form number.
2. The full list of exclusions and any limitations or sublimits on the form and endorsements.
3. Whether flood, earth movement, wear and tear, and boiler or machinery losses are excluded, and whether separate coverage is scheduled.
4. Whether the insurer is admitted or surplus lines, if you are in Florida.
5. Which locations and property types the form applies to.

The business insurance quiz turns your own answers into an editable checklist with an on-device print/PDF option. For wider policy reading, see Understanding Business Insurance Policies, the business owners policy page, and the Florida, Texas and California guides. Valuation and coinsurance are separate questions covered in Business Property Coinsurance: Questions Before You Choose a Limit.

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