Definition:Special form
📋 Special form is a type of property insurance coverage structure — sometimes called "all-risk" or "open perils" coverage — that insures against all causes of physical loss or damage except those specifically excluded in the policy. This stands in contrast to "named perils" or "basic form" policies, which cover only the hazards explicitly listed. The distinction is fundamental in commercial and personal lines property underwriting, as it determines the burden of proof: under a special form, the insurer must demonstrate that an exclusion applies to deny a claim, whereas under a named perils form, the policyholder must prove that the loss resulted from a covered peril.
🔎 In practice, special form policies contain a carefully drafted exclusion section that removes coverage for exposures the insurer is unwilling to accept at standard pricing or at all — commonly including war, nuclear events, wear and tear, government action, and, increasingly, specific cyber-related perils. Flood and earthquake are frequently excluded in standard special forms and offered through separate policies or endorsements. The terminology is most deeply embedded in the U.S. market, where the Insurance Services Office ( ISO) publishes standardized special form policy editions — such as the CP 10 30 for commercial property — that serve as the baseline for most carriers' filings. In the Lloyd's and London market, equivalent broad-form coverage exists but is typically negotiated on a bespoke or manuscript basis rather than following a single standard form. Other markets, including those in continental Europe and Asia, use analogous all-risk structures under different naming conventions, with policy wording governed by local regulatory requirements and market practice.
💡 Choosing between special form and named perils coverage is one of the most consequential decisions in structuring a property insurance program. Special form provides broader protection and avoids coverage gaps that the insured may not anticipate, but it commands higher premiums and requires the insurer to maintain robust exclusionary language to manage aggregation risk and emerging perils. For brokers advising commercial clients, recommending special form coverage is often standard practice for high-value or complex risks, supplemented by endorsements that buy back certain excluded perils where capacity exists. The ongoing evolution of exclusion language — particularly around communicable disease, cyber events, and climate-related perils — means that the practical breadth of a special form policy is never static, and careful wording review remains essential at every renewal cycle.
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