Property & Casualty Insurance Exam (National Portion)Property InsuranceMedium
A commercial building sustains significant damage due to a sudden and accidental discharge of water from an automatic sprinkler system. Under which commercial property Cause of Loss form would this damage typically be covered?
- ABasic Form
- BNamed Peril Form
- CBroad Form
- DSpecial Form
Show answer & explanationAnswer & explanation
Correct answer: C. Broad Form
The Broad Cause of Loss form includes all perils found in the Basic Form, plus additional perils such as falling objects, weight of snow/ice/sleet, water damage (from accidental discharge of water or steam), and collapse. Damage from a sprinkler system discharge falls under water damage for the Broad Form.
Why the other options are wrong
- A. The Basic Form covers fire, lightning, explosion, windstorm, hail, smoke, aircraft/vehicles, riot/civil commotion, vandalism, sprinkler leakage, and volcanic action, but not the broader 'water damage' or discharge from a sprinkler system in the same way as Broad.
- B. This is a general term, not a specific ISO commercial property cause of loss form.
- D. The Special Form is an 'open perils' policy covering all risks not specifically excluded, which would include this, but Broad is more specific for this type of named peril.
Broad Cause of Loss Form (Commercial Property)
A commercial property insurance form that covers perils listed in the Basic Form, plus additional perils like falling objects, weight of snow/ice/sleet, water damage (e.g., from sprinkler discharge), and collapse.
- Includes all Basic Form perils.
- Adds falling objects, weight of snow/ice/sleet, water damage (sprinkler leakage, burst pipes), and collapse.
- Offers broader named peril coverage than Basic.
Memory trick: Basic Broadens Special Exclusions.