9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse: CP 00 10

The Building and Personal Property Coverage Form (CP 00 10), often abbreviated BPP, is the most common commercial property coverage form. It insures buildings and the contents inside them at a described premises. The exam expects you to know the three coverages and the property each picks up.

The Three Coverages

The most-tested classification trap: tenant's improvements and betterments (e.g., a tenant installs new flooring it cannot legally remove) are covered under Coverage B, not Coverage A, because the tenant does not own the building.

Additional Coverages (built-in, dollar-limited)

These apply automatically with their own sub-limits — they do NOT require an 80% coinsurance percentage:

• Debris Removal — 25% of the direct loss amount, capped, plus an additional $25,000; an extra $10,000 is available if debris removal exhausts the limit.
• Preservation of Property — Covers property moved to protect it from loss, for up to 30 days.
• Fire Department Service Charge — Up to $1,000, no deductible.
• Pollutant Cleanup and Removal — Up to $10,000 annual aggregate.
• Increased Cost of Construction — For ordinance/law compliance, limited.

Coverage Extensions (require 80%+ coinsurance)

These broaden coverage only when the Declarations show a coinsurance percentage of 80% or more:

• Newly Acquired or Constructed Property — Buildings up to $250,000, business personal property up to $100,000, for 30 days.
• 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 (trees, shrubs, plants) — Up to $1,000, max $250 per tree/shrub/plant, named perils only.

What Is NOT Covered Property

The BPP excludes certain categories of property regardless of cause:

• Money, securities, accounts, deeds, bills, evidence of debt (covered under crime forms instead)
• Land, water, growing crops, lawns (except as limited outdoor property)
• Automobiles held for sale, aircraft, watercraft
• Contraband; property in transit
• The cost to excavate, grade, or fill land

Valuation Default

Unless the Optional Coverages section activates Replacement Cost or Agreed Value, losses are settled at Actual Cash Value (ACV) — replacement cost minus depreciation. A building with a $500,000 replacement cost and 40% depreciation has an ACV of $300,000. Knowing this default is essential for the coinsurance math in Section 9.5.

Optional Coverages Built Into CP 00 10

The BPP's Optional Coverages section lets the producer activate four enhancements by entry on the Declarations:

• Agreed Value — Suspends the coinsurance condition for the term; the insurer agrees the limit is adequate, so no penalty applies to partial losses.
• Inflation Guard — Automatically increases building/contents limits by a stated annual percentage, applied pro rata across the term.
• Replacement Cost — Settles loss without depreciation, provided repairs are actually made; the insured may first claim ACV and later collect the withheld depreciation once rebuilt.
• Extension of Replacement Cost to Personal Property of Others — Applies RC to Coverage C.

Deductible Mechanics

The BPP carries a single per-occurrence deductible (commonly $1,000 or $2,500) applied to the total loss from one event, AFTER coinsurance is applied. The order is always: compute the coinsurance-adjusted loss first, then subtract the deductible. Reversing that order is a frequent exam wrong-answer.

Covered vs. Excluded Property Snapshot

A quick reference for the most-tested classifications: completed additions, permanently installed fixtures, and outdoor fixtures fall under Building (A); leased personal property the insured is contractually responsible for, plus tenant improvements, fall under Business Personal Property (B); and money, securities, and accounts always belong in a crime form, never the BPP.

What the BPP Covers Under Each Heading

The BPP organizes covered property into three categories the exam expects you to distinguish:

Coverage Extensions and Additional Coverages

The BPP grants automatic Additional Coverages — debris removal (typically 25% of the loss plus limit, with an added cap), preservation of property, fire department service charge (often $1,000), and pollutant cleanup (commonly $10,000/year). It also provides Coverage Extensions such as newly acquired property, personal effects, valuable papers, property off-premises, and outdoor property, each with its own sublimit.

Knowing that these built-in coverages carry separate sublimits above the main limit — and apply only if the insured meets the coinsurance condition — is a recurring exam detail that distinguishes the BPP from a bare building policy.

Tenant's Improvements and Betterments

A heavily tested BPP nuance is improvements and betterments — fixtures and alterations a tenant makes to a leased space that legally become part of the building. Because the tenant cannot remove them at lease end, they are insured as the tenant's business personal property. If destroyed and not replaced, settlement is based on the unexpired portion of the lease (a proportional value), not full replacement cost. Knowing that a tenant — not the landlord — insures its own improvements, and how they are valued when not replaced, is a recurring commercial-property exam point.