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 workhorse of commercial property. It states what is insured; a separate causes of loss form (9.3) states which perils apply. Property is organized into three coverages, each insured only if a limit appears beside it on the declarations.

Coverage A — Building

The described building plus completed additions; permanently installed fixtures, machinery, and equipment; outdoor fixtures; and personal property used to maintain or service the building (fire extinguishers, appliances, floor coverings, ventilating equipment). Additions under construction are also Coverage A.

Coverage B — Your Business Personal Property

Property the insured owns and uses: furniture and fixtures, machinery, stock (raw materials, goods in process, finished goods, supplies), and labor and materials furnished on others' property. Critically, Tenant Improvements and Betterments are Coverage B — the tenant paid for alterations it cannot legally remove, so they are insured as the tenant's business personal property.

Coverage C — Personal Property of Others

Property of others in the insured's care, custody, or control at the premises. Loss payment goes to the owner. Coverage C is not full bailee coverage; large bailee exposures need an inland marine floater.

Coverage Extensions (No Extra Premium)

When the declarations show 80 percent or higher coinsurance (or a value-reporting form), these extensions add limited insurance automatically. The caps are heavily tested.

Additional Coverages (Built In)

Valuation

Actual Cash Value (ACV) — replacement cost minus depreciation — is the default. The Replacement Cost (RC) option pays repair or replacement with like kind and quality, but only after the insured actually repairs or replaces; otherwise the insurer pays ACV until repairs are made. Agreed Value locks a stipulated amount and suspends coinsurance.

Functional Replacement Cost is a fourth option for older or specialized buildings: it pays to replace damaged property with functionally equivalent but often cheaper materials — for example, replacing ornate plaster with drywall — capping the insurer's exposure on a structure that would be over-insured at modern replacement cost. The valuation method shown on the declarations always governs; the exam frequently pairs a 30-year-old building with an Agreed Value or Functional Replacement Cost answer to test whether the candidate reads the declarations rather than assuming the ACV default.

Coinsurance Under the BPP

The BPP carries an 80 percent coinsurance clause by default (the percentage shown can be 80, 90, or 100). The insured must carry a limit equal to at least that percentage of the property's value at the time of loss. Shortfalls reduce recovery by the formula:

Payment = Loss × (Limit Carried ÷ Limit Required) − deductible

Worked example: A building is worth $1,000,000 with 80 percent coinsurance, so the required limit is $800,000. The owner insured only $500,000. A $200,000 partial fire loss recovers $200,000 × ($500,000 ÷ $800,000) = $125,000 before the deductible. The $75,000 shortfall is the coinsurance penalty.

ACV Worked Example

A 10-year-old roof costs $50,000 to replace and is 30 percent depreciated. Under ACV the insurer pays $50,000 − $15,000 = $35,000; under the RC option it pays the full $50,000 once repairs occur.

Property NOT Covered and Common Traps

The BPP excludes money, securities, accounts, and bills; land, water, growing crops; outdoor bridges, walks, roadways; licensed vehicles; the cost of excavations and grading; and electronic data beyond a small sublimit.

• The outdoor property $1,000 cap and $250-per-plant cap are favorite distractors.
• ACV is the default; RC is paid only after repair or replacement.
• Tenant Improvements are Coverage B, not Coverage A.
• Agreed Value suspends coinsurance but does not waive the deductible.

Mortgageholder and Loss-Payment Provisions

The BPP includes a Mortgageholder condition that protects a lender's interest even when the insured's own claim is denied for an act or neglect the lender did not commit, provided the mortgageholder pays any premium the insured failed to pay and reports hazard changes. Loss payment gives the insurer four options: pay the value, pay the cost to repair, rebuild with like kind and quality, or take the property at the agreed value and reimburse. This is why an adjuster, not the insured, ultimately selects the settlement method within policy terms.

Deductibles

The BPP applies a flat per-occurrence deductible (commonly $500 or $1,000), subtracted once per loss event after any coinsurance adjustment. In catastrophe-exposed states a percentage wind/hail or named-storm deductible can replace the flat amount by endorsement; it is calculated as a percentage of the building limit, not of the loss, so a 5 percent deductible on a $2,000,000 building is $100,000 regardless of the loss size.