9.2 Building and Personal Property Coverage Form (BPP)

The CP 00 10 Framework

The Building and Personal Property (BPP) Coverage Form (CP 00 10) is the core commercial property form. It states what is insured; a separate Causes of Loss form (Section 9.3) states which perils apply. The BPP organizes covered property into three coverages, each insured only if a limit of insurance appears for it on the declarations.

Coverage A — Building

The building described in the declarations, completed additions, permanently installed fixtures, machinery and equipment, outdoor fixtures, and personal property the insured owns that is used to maintain or service the building (fire extinguishers, outdoor furniture, floor coverings, appliances for refrigerating, ventilating, cooking, dishwashing, or laundering).

Coverage B — Your Business Personal Property

Property the insured owns and uses in business: furniture and fixtures, machinery and equipment, stock (raw materials, goods in process, finished goods, supplies), and labor/materials on others' property. Tenant Improvements and Betterments are Coverage B — alterations a tenant made and cannot legally remove.

Coverage C — Personal Property of Others

Property of others in the insured's care, custody, or control at the described premises (customer goods being repaired, consigned merchandise). Loss is paid to the owner, not the insured.

Property Not Covered

The BPP excludes several categories outright: money and securities (covered under Crime forms), land, water, growing crops, and standing timber, vehicles licensed for road use, aircraft and watercraft, the cost to excavate or fill land, bridges, roadways, and walks, and electronic data (with a small additional coverage exception). Foundations below the lowest basement floor or below ground are also excluded. The exam frequently asks which listed item is not covered — money and licensed autos are the classic distractors.

Extensions, Coinsurance, and Valuation

The BPP covers property at the described premises or within 100 feet. Several Coverage Extensions add modest amounts (subject to the coinsurance condition being met), and several Additional Coverages are built in.

• Newly Acquired or Constructed Property — buildings up to $250,000 and business personal property up to $100,000 at a new location, for 30 days.
• Personal Effects and Property of Others — up to $2,500.
• Debris Removal — up to 25% of the loss plus deductible, with an extra $25,000 if the cap is exhausted.
• Preservation of Property — covers property moved to protect it from loss, for 30 days.

Coinsurance Math

The Coinsurance condition (commonly 80%) penalizes underinsurance. The formula is:

Recovery = (Limit Carried / Limit Required) x Loss − Deductible.

Worked example: a building worth $500,000 with 80% coinsurance must carry $400,000. The insured carries only $300,000 and suffers a $100,000 loss with a $1,000 deductible. Recovery = ($300,000 / $400,000) x $100,000 = $75,000, minus $1,000 = $74,000. The insured absorbs the difference as a coinsurance penalty.

Valuation

The default is Actual Cash Value (ACV) = replacement cost minus depreciation. The optional Replacement Cost provision pays without depreciation but only if the property is actually repaired or replaced.

If the insured chooses Replacement Cost but does not rebuild, settlement reverts to ACV. Stock that the insured has sold but not yet delivered is valued at the selling price less discounts and unincurred expenses (the selling price valuation), which is why a retailer's finished goods can be worth more than their raw cost.

How the Deductible and Optional Coverages Interact

The BPP applies a per-occurrence deductible (default $500, often increased) after coinsurance is applied. The order of operations is critical on numeric questions: first apply the coinsurance ratio, then subtract the deductible.

Optional Coverages on the Declarations

Three options that suspend or modify coinsurance appear on the BPP declarations:

• Agreed Value — the insurer accepts a statement of values; coinsurance is suspended for the term, removing the penalty risk.
• Inflation Guard — automatically increases the limit by a stated annual percentage to keep pace with rising costs.
• Replacement Cost — replaces ACV valuation as described above.

Worked Example — Coinsurance Met, Then Deductible

A building worth $1,000,000 carries 80% coinsurance, so the required limit is $800,000. The insured carries exactly $800,000 and has a $50,000 loss with a $2,500 deductible. Because coinsurance is fully met (800k / 800k = 1.0), there is no penalty; the insurer pays $50,000 − $2,500 = $47,500. Contrast this with the earlier underinsured example: meeting the coinsurance requirement eliminates the ratio penalty entirely, leaving only the deductible.

Reading a BPP Declarations Page

On the exam you may be handed a declarations excerpt and asked what is covered. The page shows each coverage (A, B, C) with its own limit, the coinsurance percentage, the causes of loss form selected, the deductible, and any optional coverages (Agreed Value, Replacement Cost, Inflation Guard) marked as applying. If a coverage shows no limit, that property is simply not insured, no matter what the coverage form says.

Mortgageholder Interest

The BPP's Mortgageholder condition protects a lender's interest even if the insured's own claim is denied for an act or neglect the lender did not know about. The mortgageholder also receives separate cancellation notice. This is a frequently tested protection that survives the named insured's misconduct.