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Commercial Lines Rating Series: Part 7 – Causes of Loss – Broad Form

May 6, 2014

Broad form

Causes of Loss – Broad Form

Broad Cause of Loss provides coverage for the same 11 causes of loss as Basic Form, which are:

      Group I:        Group II:
1.  Fire

2.  Lightning

3.  Explosion

4.  Vandalism

5.  Sprinkler Leakage*

6. Windstorm or Hail

7. Smoke

8. Aircraft or Vehicles

9. Riot and Civil Commotion

10. Sinkhole Collapse

11. Volcanic Action

        * Sprinkler Leakage is included in Group I whether or not the building is sprinklered.


And includes the following additional causes of loss:

  1. Falling Objects
  2. Weight of snow, ice or sleet
  3. Water damage

Also included is an additional coverage for collapse.

The Broad Cause of Loss Form contains an explanation of what collapse means for the purpose of this additional coverage; As well as a description of each of the covered causes of loss.

These causes of loss (perils) are the only ones for which a claim will be paid on a policy written with Broad Form.

Specifically rated properties as well as class rated properties are eligible.

When rating a policy with broad form, the amount of insurance and the coinsurance percentage must be the same for each cause of loss rated.


There are some eligibility requirements:

Coinsurance must be at least 80% for property damage and 50% for time element coverages. There are also certain kinds of risks that are not to be written on a Broad Form policy –

  • Farm or farming operations
  • Grain elevators, grain tanks and grain warehouses
  • Neon, automatic, or mechanical electric outdoor signs erected or in the course of construction
  • Risks rated using the Rating Plan for Highly Protected Risks or Superior Risks

To develop the premium for a Broad Form policy, you will need to rate

  • Group I Causes of Loss
  • Group II Causes of Loss


  • Broad Cause of Loss

Basic Group I (BGI) and Basic Group II (BGII) loss costs are determined in the same way as a Basic Form policy, regardless of whether the risk is class rated or specifically rated.

Broad form loss costs are based on the construction of the building. Here is an example of what the loss costs might look like:

 Item  Modified Fire Resistive(5) and Fire Resistive(6)  All Other

(1 – 4)

 Building  .006  .011
 Personal Property  .008  .017


Applying rate factors:

BGI and BGII loss costs –

  • The same rate factors, applied in order for a Basic form policy, also apply to a Broad form policy when rating BGI and BGII.

Broad Form loss costs –

Apply rate factors in the following order.

  • Company filed loss cost multiplier
  • Coinsurance adjustment, if applicable
  • Limit of Insurance relativity factor, if LOI rating method is used
  • Factors or charges required by individual rules

Apply additive factors before applying multiplicative factors unless a rule states otherwise.

The complete Broad Form Rule (Rule 71) is found in Division Five of the Commercial Lines Manual.


Subscribers, full rating training for your staff is included in your WSRB package at no additional cost! Call Terry Krueger at 206.273.7153 or email


Article by: Terry Krueger, Subscriber Services Administrator

Check out more articles from our Commercial Lines Rating Series!

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