Special Form Coverages For Business Property

Another type of coverage that insurance lawyers see is called, Special Form Coverage.  Special Form Coverage is the broadest form commercial coverage.  The special form provides “all risk” insurance which covers any accidental cause of loss unless specifically excluded by the policy.

The special form contains the following exclusions, which are also contained in the basic form and broad form:

1) ordinance or law

2) earth movement

3) water damage

4) mechanical breakdown

The special form contains many other exclusions and limitations, some of which restrict coverage for certain exposures to “specified cause of loss” instead of “all risks.”  The special form also excludes several risks also excluded by the broad form:

  1.  windstorm
  2. smoke
  3. weight of ice, snow, or sleet
  4. collapse of building

Unlike the basic and broad forms, the special form covers theft losses.  The form, however, contains several theft related exclusions and limitations.  For example, employee dishonesty is specifically excluded from theft coverage as are inventory shortages.

The special form contains a “pollution exclusion” but it does not exclude all pollution claims.  The escape of pollutants caused by a specified peril is covered.  For example, if a fire or explosion causes the dispersal of pollutants, limited coverage is provided both for repairing the damage to property and for cleaning up the debris.  Most policies contain a very low limit for this type of loss.  As an example, the loss may be limited to $10,000 per policy year, per location.

One thing to keep in mind on all the various forms discussed in this blog or discussed with your insurance agent is that the policies have to be read.  They have to be read and discussed with your agent to make sure you are getting the coverage you want.  Your attorney has to read the policies to ensure what is or is not covered when a claim for benefits is denied so as to be able to advise as to the best course of action.