9.2 Building and Personal Property Coverage Form (BPP)
Key Takeaways
- CP 00 10 (BPP) defines covered property in three coverages: Building (A), Your Business Personal Property (B), and Personal Property of Others (C).
- Business personal property must be inside or within 100 feet of the premises; money/securities, licensed vehicles, and land are Property Not Covered.
- Built-in Additional Coverages include Debris Removal (25% of loss + deductible, +$25,000), Fire Department Service Charge ($1,000), and Pollutant Cleanup ($10,000).
- Default valuation is ACV; Optional Coverages add Agreed Value (suspends coinsurance), Inflation Guard, and Replacement Cost.
- Coinsurance penalty = (carried / required) x loss; underinsuring below the required percentage shifts loss to the insured.
The Workhorse of Commercial Property: CP 00 10
The Building and Personal Property Coverage Form (BPP), CP 00 10, is the single most-tested commercial property form. It defines what is covered; a separate Causes of Loss form (Section 9.3) defines which perils trigger that coverage. Always pair them mentally.
The BPP offers three coverages, each requiring a separate limit of insurance on the declarations:
| Coverage | Includes | Key inclusions/exclusions |
|---|---|---|
| A. Building | The structure, fixtures, permanently installed machinery/equipment, completed additions, outdoor fixtures | Includes maintenance equipment for the building; you must own it |
| B. Your Business Personal Property (BPP) | Furniture, stock, machinery, tenant improvements & betterments, leased property the insured must insure | Property must be inside or within 100 feet of the building/premises |
| C. Personal Property of Others | Others' property in the insured's care, custody, or control | Loss paid to the owner; limit shared with the location |
Trap: "Business Personal Property" (the coverage) and "BPP" (the form name) share initials. Read carefully — the form CP 00 10 contains the coverage called Your Business Personal Property.
Tenant Improvements and the 100-Foot Rule
Two tested wrinkles in Coverage B deserve attention. First, tenants' improvements and betterments — fixtures, alterations, and installations a tenant makes to a building it does not own — are insured as the tenant's business personal property. If destroyed before the lease ends, the tenant recovers their unamortized value; if the landlord pays to restore them, the tenant recovers nothing.
Second, the 100-foot rule: business personal property is covered while in or on the described building or in the open (or in a vehicle) within 100 feet of the building or premises. Property beyond 100 feet needs the Property Off-Premises extension or a separate policy. A question describing stock stored in a yard 150 feet away is testing this boundary.
Covered Property, Property Not Covered, and Additional Coverages
The BPP lists Property Not Covered, which the exam mines for distractors: money and securities (covered by Crime, not property), accounts/bills/records as such, vehicles licensed for road use, land/water/growing crops, and the cost to excavate.
Additional Coverages built into CP 00 10 (no extra premium, subject to sub-limits):
- Debris Removal — pays to remove debris of covered property after a covered loss; limited to 25% of the loss plus the deductible, with an additional $25,000 available if that cap is exhausted.
- Preservation of Property — covers property moved to protect it from loss for up to 30 days.
- Fire Department Service Charge — up to $1,000 (an additional amount, no deductible).
- Pollutant Cleanup and Removal — up to $10,000 per 12-month period.
Coverage Extensions (require 80% coinsurance to apply): Newly Acquired or Constructed Property (up to $250,000 per new building / $100,000 per new location of business personal property, for 30 days), Personal Effects, Valuable Papers, Property Off-Premises, and Outdoor Property.
What the BPP Covers: Three Coverage Categories
The Building and Personal Property Coverage Form (BPP) is the workhorse of commercial property. It offers three coverages the insured can select on the Declarations:
- Building — the described structure, completed additions, fixtures, permanently installed machinery and equipment, and outdoor fixtures; also materials/supplies used to maintain the building.
- Your Business Personal Property (BPP/contents) — furniture, fixtures, machinery, stock, and other personal property the insured owns and uses in business, located in or within 100 feet of the described premises.
- Personal Property of Others — others' property in the insured's care, custody, or control; loss is adjusted with the owner, but payment is made to the insured.
A standard provision extends limited coverage to newly acquired or constructed buildings and to business personal property at newly acquired locations, plus small additional coverages for debris removal, preservation of property, fire department service charge, and pollutant cleanup.
Coinsurance, Valuation, and Optional Coverages on the BPP
The BPP applies a coinsurance condition (commonly 80%, 90%, or 100%) using the familiar Did/Should formula, and it settles loss at actual cash value unless the Optional Coverages modify it. Three optional coverages are heavily tested: Agreed Value (suspends coinsurance for the term based on a signed statement of values), Replacement Cost (settles without depreciation, subject to actually rebuilding/replacing), and Inflation Guard (automatically increases limits by a stated annual percentage).
Several coverage extensions broaden the form for insureds meeting the coinsurance requirement: extensions for newly acquired property, personal effects and property of others (small limit), valuable papers and records (cost of research), property off-premises, and outdoor property (trees, shrubs, plants — with per-item caps). The BPP excludes some property entirely — money and securities (covered under Crime forms), vehicles licensed for road use, land/water, and growing crops — directing those exposures to other coverage parts.
Knowing what the BPP excludes and which optional coverage suspends coinsurance is the high-yield exam content.
Under the BPP (CP 00 10), the Debris Removal additional coverage will pay up to what amount before the supplemental limit applies?
Valuation, Coinsurance, and the Optional Coverages
By default the BPP settles losses at Actual Cash Value (ACV) — replacement cost minus depreciation. The Optional Coverages on the declarations can change this:
- Agreed Value — suspends the coinsurance condition; the insurer agrees the stated limit equals the agreed value, so no penalty applies.
- Inflation Guard — automatically increases the limit by a stated annual percentage.
- Replacement Cost — settles at RC (no depreciation) if the property is repaired/replaced; the insured may first collect ACV and then claim the RC difference once repairs are made.
Worked ACV example: A roof costs $30,000 to replace, has a 20-year life, and is 5 years old. Depreciation = 5/20 = 25%, so ACV = $30,000 − $7,500 = $22,500. Under ACV settlement the insurer pays $22,500 (less deductible); under Replacement Cost the insured can recover the full $30,000 after repairs.
Worked coinsurance example: A building worth $1,000,000 carries 80% coinsurance, requiring $800,000 of insurance, but is insured for only $600,000. A $200,000 loss is paid: (carried ÷ required) × loss − deductible = ($600,000 ÷ $800,000) × $200,000 = 0.75 × $200,000 = $150,000. The insured absorbs $50,000 as the coinsurance penalty (before any deductible).
Deductible sequencing: the coinsurance penalty is applied first, then the deductible is subtracted from the reduced figure. Using the example above, a $1,000 deductible leaves a net payment of $150,000 − $1,000 = $149,000. Reversing the order is a common wrong-answer construction on the exam.
A building valued at $500,000 has an 80% coinsurance clause and is insured for $300,000. A $100,000 covered loss occurs (ignore the deductible). How much does the insurer pay?