Commercial Property Policy
Cause of Loss - Special Form
CAUSES OF LOSS COVERED
The last of three forms of the Commercial Property policy is the Special
Form. Different from the Basic and Broad Forms, each of which spells
out a series of perils which are assumed under the policy, the Special
Form covers on "risks of direct physical loss basis" excepting only
causes of loss which are specifically excluded by the policy, or on
which restricted coverage applies, as stated in the policy provisions.
Theft - The policy now covers against the peril of theft of most personal
property. This extension of coverage may be excluded by endorsement.
Thawing of Ice or Snow - The Special Form covers loss to the interior of
the building when caused by the melting or thawing of ice or snow on
the building (known as "ice dam").
Collapse - The Special Form provides, as an additional coverage,
protection against collapse. This coverage is identical with the protection
afforded by the Broad Form (discussed here under CAUSES OF LOSS
COVERED-Collapse).
Property In Transit - The insurance is extended to cover personal
property more than 100 feet from the insured's premises while in transit
or on motor vehicles owned, leased or operated by the insured. The
policy does not cover property in the care, custody or control of the
insured's sales people.
Furthermore, this coverage applies only to such property when lost or
damaged by fire, lightning, explosion, windstorm or hail; riot or civil
commotion or vandalism; vehicle collision, upset or overturn; or theft of
an entire bale, case or package by forced entry into a securely locked
body or compartment of the vehicle on which visible marks of entry have
been made. This extension of coverage is limited to $1,000 and is
additional to the amount of the policy.
CAUSES OF LOSS NOT COVERED
The Special Form is subject to all the exclusions which are part of the
Basic Form, although, in a few instances which will be spelled out, there
are some variations or additions.
The Special Form is identical in its exclusions to the Basic Form in the
following respects: war, military action, insurrection, rebellion,
governmental authority, utility services, nuclear hazards, building
ordinance, earth movement, water losses, electrical apparatus clause
and explosion of steam boilers. (See discussion of these exclusions here
under BASIC FORM-Causes Of Loss Not Covered.)
Additional Exclusions - As was pointed out before, the SPECIAL FORM
policy does not stipulate causes of loss which are covered but covers
instead on "risks of physical loss." In the absence of special exclusions,
the policy would cover loss or damage not due to a fortuitous event or to
other situations which are not generally considered to be proper subjects
for insurance. As a consequence, the Special Form incorporates a
series of special exclusions which are not ordinarily part of the usual
policy covering on stated perils. Excluded are: wear and tear; rust,
corrosion, fungus, decay, deterioration, loss due to inherent defect or
inherent vice; smog, release or discharge or contaminants or pollutants;
settling, cracking, shrinking or expansion; insects, birds, rodents or other
animals; mechanical breakdown*; rupture or bursting caused by
centrifugal force.
*The mechanical breakdown exclusion specifically provides that it does
not apply to any resulting loss or damage caused by an elevator collision.
When personal property is covered under the Special Form, the policy
does not cover losses due to marring or scratching or to dampness or
drying of the atmosphere. Also excluded is damage to personal property
in the open due to rain or snow, or ice or sleet.
It is important to note that if loss or damage by the "specified loss"
occurs, or if building glass breakage results, the policy will pay for the
resulting loss.
"Specified cause of loss" as used in the preceding paragraph means any
of the following: fire, lightning, explosion; windstorm or hail; smoke;
aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire
extinguishing equipment; sinkhole collapse; volcanic action; falling
objects; weight of snow, ice or sleet; water damage.
Dishonest Acts of Insured, Employees and Others - The Special Form
also excludes losses by dishonest acts of the insured, his or her
partners, employees, directors, trustees, authorized representatives or
anyone to whom the insured entrusts the property whether such person
is acting alone or in collusion with others. Destructive acts by employees
are covered.
Theft - Loss of most types of personal property by theft is covered
under the Special Form but may be excluded by endorsement with an
appropriate reduction in premium.
Weather Conditions - Excluded are losses due to weather conditions
which contribute to a loss which is excluded by the underlying policy
provisions.
Acts or Decisions - The policy does not cover losses due to the failure to
act or due to decisions or acts by any person, organization or
governmental body.
Faulty Design, Planning, Etc. - The Special Form does not apply to losses
arising from faulty, inadequate or defective planning or design,
workmanship, repair, construction, grading or compaction; or due to
maintenance or materials used in repair or construction.
Voluntary Surrender of Property - The policy does not cover the
voluntary giving up of any property by the insured or by anyone to whom
he has entrusted the property, if such act is induced by a fraudulent
scheme or pretense.
As indicated, the Special Form contains limitations on the following losses:
Hot Water Boiler - The policy does not cover damage to hot water heating
equipment resulting from any condition within the equipment, except if
due to explosion.
Rain, Snow, Sleet, Ice, Sand or Dust - There is no coverage under the
policy for damage by rain, snow, sleet, ice, sand or dust to the interior of
any building whether driven by the wind unless the building first sustains
damage by a covered cause of loss to its roof or walls through which
the rain, snow, sleet, ice, sand or dust enter; or through the thawing of
snow, sleet or ice on the building. (This type of loss is sometimes
referred to as "ice dam" losses.) Damage to gutters and downspouts by
the weight of ice, snow or sleet is specifically excluded.
Missing Property - There is no coverage for loss by theft of building
materials not attached to the building or of property which has been
transferred to a person or place outside the premises by unauthorized
instructions.
Furthermore, there is no coverage for property which is missing where
there is no evidence to show what happened to it. Thus, shortage
disclosed upon taking of an inventory would not be sufficient to establish
a loss under the policy.
Glass Breakage - The coverage on the breakage of glass which is part
of a building is subject to specified dollar limitations, identical with the
Glass Breakage provisions of the Commercial Property policy-BROAD
FORM. This limitation does not apply to damage by the "specified cause
of loss" other than vandalism.
PROPERTY NOT COVERED
Certain types of property are excluded from coverage under the policy,
or are restricted in coverage.
Unless caused by the "specified causes of loss" or by glass breakage,
the policy will not pay for loss or damage to:
Jewelry and Furs Limitations - The policy will not be liable for more than
$2,500 for loss by theft to the following classes of property:
NOTE: The $2,500 limit applies to each class of property and is the
maximum payable for any occurrence involving the class of property. An
exception is made for items of jewelry and watches worth $100 or less per
item, and such items do not fall within the $2,500 limitation.
Patterns, Dies, Molds and Forms - Patterns, dies, molds and forms, while
covered against risks of direct physical loss, are insured for a maximum
of $2,500 for theft losses.
Stamps, Tickets and Letters of Credit - As in the case of Patterns, Dies,
etc., discussed directly above, the policy limits the coverage to $250
against loss by theft.
Cause of Loss - Special Form
CAUSES OF LOSS COVERED
The last of three forms of the Commercial Property policy is the Special
Form. Different from the Basic and Broad Forms, each of which spells
out a series of perils which are assumed under the policy, the Special
Form covers on "risks of direct physical loss basis" excepting only
causes of loss which are specifically excluded by the policy, or on
which restricted coverage applies, as stated in the policy provisions.
Theft - The policy now covers against the peril of theft of most personal
property. This extension of coverage may be excluded by endorsement.
Thawing of Ice or Snow - The Special Form covers loss to the interior of
the building when caused by the melting or thawing of ice or snow on
the building (known as "ice dam").
Collapse - The Special Form provides, as an additional coverage,
protection against collapse. This coverage is identical with the protection
afforded by the Broad Form (discussed here under CAUSES OF LOSS
COVERED-Collapse).
Property In Transit - The insurance is extended to cover personal
property more than 100 feet from the insured's premises while in transit
or on motor vehicles owned, leased or operated by the insured. The
policy does not cover property in the care, custody or control of the
insured's sales people.
Furthermore, this coverage applies only to such property when lost or
damaged by fire, lightning, explosion, windstorm or hail; riot or civil
commotion or vandalism; vehicle collision, upset or overturn; or theft of
an entire bale, case or package by forced entry into a securely locked
body or compartment of the vehicle on which visible marks of entry have
been made. This extension of coverage is limited to $1,000 and is
additional to the amount of the policy.
CAUSES OF LOSS NOT COVERED
The Special Form is subject to all the exclusions which are part of the
Basic Form, although, in a few instances which will be spelled out, there
are some variations or additions.
The Special Form is identical in its exclusions to the Basic Form in the
following respects: war, military action, insurrection, rebellion,
governmental authority, utility services, nuclear hazards, building
ordinance, earth movement, water losses, electrical apparatus clause
and explosion of steam boilers. (See discussion of these exclusions here
under BASIC FORM-Causes Of Loss Not Covered.)
Additional Exclusions - As was pointed out before, the SPECIAL FORM
policy does not stipulate causes of loss which are covered but covers
instead on "risks of physical loss." In the absence of special exclusions,
the policy would cover loss or damage not due to a fortuitous event or to
other situations which are not generally considered to be proper subjects
for insurance. As a consequence, the Special Form incorporates a
series of special exclusions which are not ordinarily part of the usual
policy covering on stated perils. Excluded are: wear and tear; rust,
corrosion, fungus, decay, deterioration, loss due to inherent defect or
inherent vice; smog, release or discharge or contaminants or pollutants;
settling, cracking, shrinking or expansion; insects, birds, rodents or other
animals; mechanical breakdown*; rupture or bursting caused by
centrifugal force.
*The mechanical breakdown exclusion specifically provides that it does
not apply to any resulting loss or damage caused by an elevator collision.
When personal property is covered under the Special Form, the policy
does not cover losses due to marring or scratching or to dampness or
drying of the atmosphere. Also excluded is damage to personal property
in the open due to rain or snow, or ice or sleet.
It is important to note that if loss or damage by the "specified loss"
occurs, or if building glass breakage results, the policy will pay for the
resulting loss.
"Specified cause of loss" as used in the preceding paragraph means any
of the following: fire, lightning, explosion; windstorm or hail; smoke;
aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire
extinguishing equipment; sinkhole collapse; volcanic action; falling
objects; weight of snow, ice or sleet; water damage.
Dishonest Acts of Insured, Employees and Others - The Special Form
also excludes losses by dishonest acts of the insured, his or her
partners, employees, directors, trustees, authorized representatives or
anyone to whom the insured entrusts the property whether such person
is acting alone or in collusion with others. Destructive acts by employees
are covered.
Theft - Loss of most types of personal property by theft is covered
under the Special Form but may be excluded by endorsement with an
appropriate reduction in premium.
Weather Conditions - Excluded are losses due to weather conditions
which contribute to a loss which is excluded by the underlying policy
provisions.
Acts or Decisions - The policy does not cover losses due to the failure to
act or due to decisions or acts by any person, organization or
governmental body.
Faulty Design, Planning, Etc. - The Special Form does not apply to losses
arising from faulty, inadequate or defective planning or design,
workmanship, repair, construction, grading or compaction; or due to
maintenance or materials used in repair or construction.
Voluntary Surrender of Property - The policy does not cover the
voluntary giving up of any property by the insured or by anyone to whom
he has entrusted the property, if such act is induced by a fraudulent
scheme or pretense.
As indicated, the Special Form contains limitations on the following losses:
Hot Water Boiler - The policy does not cover damage to hot water heating
equipment resulting from any condition within the equipment, except if
due to explosion.
Rain, Snow, Sleet, Ice, Sand or Dust - There is no coverage under the
policy for damage by rain, snow, sleet, ice, sand or dust to the interior of
any building whether driven by the wind unless the building first sustains
damage by a covered cause of loss to its roof or walls through which
the rain, snow, sleet, ice, sand or dust enter; or through the thawing of
snow, sleet or ice on the building. (This type of loss is sometimes
referred to as "ice dam" losses.) Damage to gutters and downspouts by
the weight of ice, snow or sleet is specifically excluded.
Missing Property - There is no coverage for loss by theft of building
materials not attached to the building or of property which has been
transferred to a person or place outside the premises by unauthorized
instructions.
Furthermore, there is no coverage for property which is missing where
there is no evidence to show what happened to it. Thus, shortage
disclosed upon taking of an inventory would not be sufficient to establish
a loss under the policy.
Glass Breakage - The coverage on the breakage of glass which is part
of a building is subject to specified dollar limitations, identical with the
Glass Breakage provisions of the Commercial Property policy-BROAD
FORM. This limitation does not apply to damage by the "specified cause
of loss" other than vandalism.
PROPERTY NOT COVERED
Certain types of property are excluded from coverage under the policy,
or are restricted in coverage.
Unless caused by the "specified causes of loss" or by glass breakage,
the policy will not pay for loss or damage to:
 | Valuable papers and records, such as books of account, | |
| manuscripts, abstracts, drawings, card index systems, film, tape, disc, drum, cell or other data processing, recording or storage media, and other records. | ||
| Animals, and then only if they are killed or their destruction | |
| becomes necessary. | ||
| Builders' machinery, tools and equipment owned by the insured | |
| or entrusted to him or her, except for such property held for sale by the insured. | ||
| Fragile articles such as glassware, statuary and porcelains, if | |
| broken. | ||
| An exception from the exclusion is made for glass which is part | |
| of a building, containers of property held for sale, or lenses for photographic or scientific instruments. |
Jewelry and Furs Limitations - The policy will not be liable for more than
$2,500 for loss by theft to the following classes of property:
| furs and fur garments; | |
| jewelry, watches, pearls, precious and semi-precious stones or | |
| precious metals or alloys. |
NOTE: The $2,500 limit applies to each class of property and is the
maximum payable for any occurrence involving the class of property. An
exception is made for items of jewelry and watches worth $100 or less per
item, and such items do not fall within the $2,500 limitation.
Patterns, Dies, Molds and Forms - Patterns, dies, molds and forms, while
covered against risks of direct physical loss, are insured for a maximum
of $2,500 for theft losses.
Stamps, Tickets and Letters of Credit - As in the case of Patterns, Dies,
etc., discussed directly above, the policy limits the coverage to $250
against loss by theft.
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MY Insurance Agency
The materials on this page is meant to be
informative in nature. Due to the ever
changing and varying state laws, and the fact
some insurers offer coverage in slightly
different forms from the Insurance Services
Office (ISO) standard forms, we cannot
guarantee the accuracy of the materials on
this page.
informative in nature. Due to the ever
changing and varying state laws, and the fact
some insurers offer coverage in slightly
different forms from the Insurance Services
Office (ISO) standard forms, we cannot
guarantee the accuracy of the materials on
this page.