9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse Form: CP 00 10

The Building and Personal Property Coverage Form (CP 00 10) is the most-tested commercial property form. It provides three coverages, each shown with a separate limit on the declarations:

• Building — the structure, completed additions, fixtures, permanently installed machinery/equipment, owner-supplied appliances used for maintenance (refrigeration, fire extinguishing, laundry), and additions under construction.
• Your Business Personal Property (BPP) — contents the insured owns: furniture, stock, machinery, and tenant's improvements & betterments. Now extended to your business personal property located in or on the building or within 100 feet of the described premises.
• Personal Property of Others — others' property in the insured's care, custody, or control; loss is paid to the owner.

Coverage applies to property at the described premises. The form covers direct physical loss caused by a covered cause of loss, subject to the selected causes of loss form.

Coverage Extensions and Additional Coverages

The BPP grants coverage extensions that apply only when the insured carries at least 80% coinsurance (or a Value Reporting symbol). Key extensions:

• Newly Acquired or Constructed Property — buildings up to $250,000 each; business personal property at newly acquired premises up to $100,000 each; coverage lasts 30 days or until policy expiration, whichever is first.
• Personal Effects and Property of Others — up to $2,500.
• Valuable Papers and Records (cost to research/replace) — up to $2,500.
• Property Off-Premises — up to $10,000.
• Outdoor Property (fences, antennas, signs, trees/shrubs/plants) — up to $1,000, but no more than $250 per tree, shrub, or plant.

Additional Coverages built into the form include Debris Removal (25% of the loss plus the deductible, with an extra $25,000 if the basic limit is exhausted), Preservation of Property (covered up to 30 days while removed), Fire Department Service Charge ($1,000), and Pollutant Clean-up and Removal ($10,000 aggregate per year).

Coinsurance and Valuation Math

The BPP is valued at Actual Cash Value (ACV) unless Replacement Cost is selected by endorsement or the Optional Coverages. ACV = Replacement Cost minus depreciation. The coinsurance clause penalizes underinsurance.

Worked coinsurance example: A building is worth $500,000 at the time of loss. The policy carries 80% coinsurance, so the required amount = $500,000 x 0.80 = $400,000. The insured carries only $300,000. A $100,000 loss is settled:

Payment = (Carried / Required) x Loss − deductible Payment = ($300,000 / $400,000) x $100,000 = 0.75 x $100,000 = $75,000, then subtract the deductible.

The insured eats the $25,000 shortfall as a coinsurance penalty. Trap: the coinsurance percentage is applied to the property's value at the time of loss, NOT to the policy limit. Also remember the penalty never applies to a total loss when the limit equals or exceeds the required amount, and never makes the insurer pay above the policy limit.

Optional Coverages and the Agreed Value Trap

The BPP declarations let the insured elect four Optional Coverages that change how losses settle:

• Agreed Value — the insurer waives the coinsurance clause in exchange for the insured stating an agreed amount each year; losses are paid in full up to the limit with no penalty.
• Inflation Guard — automatically increases the limit by a stated annual percentage, prorated through the year, to keep pace with rising values.
• Replacement Cost — settles losses at the cost to replace with new property of like kind and quality, with no deduction for depreciation, provided the insured actually repairs or replaces.
• Extension of Replacement Cost to Personal Property of Others — applies RC settlement to others' property.

Agreed Value trap: Agreed Value suspends coinsurance only while the agreed-value option is in force and only up to the stated limit. If the insured lets it lapse or underestimates the agreed amount, the standard coinsurance clause snaps back. Replacement Cost similarly does NOT apply to stock, manuscripts, or property held for sale unless specifically endorsed, and the insured must actually replace the property within a reasonable time or recovery reverts to ACV.

What Counts as "Building" vs. "Your Business Personal Property"

A recurring trap: tenant's improvements and betterments are insured under the tenant's BPP (Coverage B), not the landlord's building, because the tenant paid for them and cannot remove them.

The 100-Foot/100-Feet Extension Rule

Several BPP coverage extensions apply only to property within 100 feet of the described premises (outdoor property, property off-premises). Knowing the 100-foot proximity limit and the small default sub-limits (e.g., $2,500 outdoor signs) is a common detail question on the CP 00 10.

Causes-of-Loss Forms Attach Separately

The CP 00 10 (BPP) defines what is covered (building, BPP, property of others) but not the perils — a separate causes-of-loss form (Basic CP 10 10, Broad CP 10 20, or Special CP 10 30) must be attached to supply the perils. Forgetting that the BPP needs a causes-of-loss form to function is a structural trap the exam uses to test understanding of how the CPP is assembled.

Vacancy Provision on the BPP

Like the homeowners vacancy rule, the BPP reduces a covered loss by a percentage and suspends certain perils (vandalism, sprinkler leakage, glass, water, theft) once the building is more than 70% vacant for over 60 consecutive days. The 70%/60-day vacancy thresholds and the 15% loss reduction are tested numeric details distinct from the homeowners figures.