A client owns a commercial printing business. Their Commercial Property Policy includes the Causes of Loss - Special Form. After a severe hail storm, they discover that their exterior signage, which is attached to the building, has been significantly damaged. The policy also contains a standard exclusion for 'loss or damage by rain, snow, sleet, or dust unless the building is first damaged by a covered peril.' How would this loss typically be handled?
- AThe damage to the signage would be covered under the 'rain, snow, sleet, or dust' exception if the building was first damaged.
- BThe damage to the signage would be excluded because hail is not specifically listed as a covered peril under the Special Form.
- CThe damage would only be covered if the building itself also sustained physical damage from the hail storm.
- DThe damage to the signage would be covered, as the Special Form covers all direct physical loss unless specifically excluded, and hail damage is generally not excluded.
Show answer & explanationAnswer & explanation
Correct answer: D. The damage to the signage would be covered, as the Special Form covers all direct physical loss unless specifically excluded, and hail damage is generally not excluded.
The Causes of Loss - Special Form provides 'open perils' coverage, meaning all direct physical losses are covered unless specifically excluded. Hail is not a standard exclusion in the Special Form, and the 'rain, snow, sleet, or dust' exclusion refers to damage caused by those elements entering an *already damaged* building, not direct damage from hail itself.
Why the other options are wrong
- A. The 'rain, snow, sleet, or dust' exclusion is not applicable here because the damage is from direct hail impact, not water ingress through a damaged opening.
- B. Special Form covers all perils unless excluded; it does not require perils to be listed.
- C. The 'rain, snow, sleet, or dust' exclusion is specific to those perils entering through a damaged roof/wall, not for direct hail impact on the building or signage.
Causes of Loss - Special Form (Commercial)
A commercial property insurance form that covers all direct physical loss to covered property unless the loss is specifically excluded or limited. It provides the broadest coverage of the Causes of Loss forms.
- Open perils (all-risk) coverage.
- Burden of proof is on the insurer to show an exclusion applies.
- Broader than Basic or Broad forms.
Memory trick: Special Form: If it's not on the 'no-go' list, it's a 'yes-go'.