9.2 Building and Personal Property Coverage Form (BPP)
Key Takeaways
- The BPP (CP 00 10) insures Building, Your Business Personal Property, and Personal Property of Others, each with its own limit.
- Tenant's improvements and betterments are covered under Your Business Personal Property, not Building.
- Memorize the additional coverage caps: Newly Acquired Buildings $250,000/30 days, Newly Acquired BPP $100,000/30 days, Property Off-Premises $10,000.
- Default valuation is ACV (replacement cost minus depreciation); Replacement Cost is optional by endorsement.
- Coinsurance penalty = (Did Carry / Should Carry) x Loss - deductible when the insured is underinsured.
The Building and Personal Property Coverage Form (CP 00 10)
The Building and Personal Property Coverage Form (BPP), ISO form CP 00 10, is the workhorse property coverage form within the Commercial Property Coverage Part. It insures direct physical loss to three categories of property, each scheduled separately on the declarations with its own limit.
The three coverage categories
- Building — the structure named in the declarations, completed additions, permanently installed fixtures, machinery and equipment, and outdoor fixtures. It also covers maintenance/service equipment and certain personal property the landlord furnishes to tenants (appliances for refrigerating, ventilating, cooking).
- Your Business Personal Property (BPP/contents) — property owned by the insured and used in the business: furniture, fixtures, machinery, stock, and tenant's improvements and betterments (alterations a tenant makes to a leased space that cannot be legally removed).
- Personal Property of Others — property of others in the insured's care, custody, or control; loss is paid to the owner.
Trap: Tenant's Improvements and Betterments are insured under Your Business Personal Property, NOT under Building, because the tenant does not own the building structure.
Additional Coverages and Coverage Extensions
The BPP grants several small built-in coverages. The dollar caps below are ISO defaults and a perennial exam target.
| Additional Coverage / Extension | ISO limit / rule (memorize) |
|---|---|
| Debris Removal | 25% of (loss + deductible), plus an additional $25,000 if the 25% is exhausted |
| Preservation of Property | Covered at any location for 30 days while being moved/stored to protect it |
| Fire Department Service Charge | Up to $1,000 (no deductible applies) |
| Pollutant Cleanup and Removal | Up to $10,000 per 12-month period |
| Newly Acquired or Constructed Buildings | Up to $250,000 per building, for 30 days |
| Newly Acquired Business Personal Property | Up to $100,000 per location, for 30 days |
| Property Off-Premises | Up to $10,000 |
| Outdoor Property (trees, shrubs, plants, fences, signs) | Up to $1,000 total; max $250 per tree, shrub, or plant |
| Valuable Papers and Records (cost to research/restore) | Up to $2,500 |
Worked example: Debris Removal
Debris removal pays an amount equal to 25% of the total of the direct loss plus the deductible. Suppose a covered fire causes $100,000 of building damage and the deductible is $1,000. The base debris-removal allowance is 25% × ($100,000 + $1,000) = $25,250. If actual debris costs exceed that base, an additional $25,000 is available, so up to $50,250 could be paid here. This is why the correct answer to "how much extra debris coverage" questions is usually the 25%-plus-$25,000 structure, not a flat figure.
Valuation: ACV vs. Replacement Cost
By default the BPP values loss at Actual Cash Value (ACV) — replacement cost minus depreciation. The insured may instead elect Replacement Cost valuation by endorsement on the declarations; even then, the insurer pays ACV until repairs/replacement are actually completed, and the property must be repaired or replaced as soon as reasonably possible.
Worked ACV example: A 10-year-old roof costs $30,000 to replace new and has a 25-year useful life. Depreciation is 10/25 = 40%, so ACV = $30,000 - (40% × $30,000) = $30,000 - $12,000 = $18,000. Under ACV the insured collects $18,000 (less any deductible); under Replacement Cost the insured collects the full $30,000 once the roof is actually replaced.
Coinsurance on the BPP
The BPP carries a coinsurance clause (commonly 80%, 90%, or 100%). If the insured carries less than the required percentage of value at the time of loss, the claim is reduced by the formula: (Did Carry / Should Carry) × Loss - Deductible.
Worked coinsurance example: A building is worth $500,000. With an 80% coinsurance clause, the insured "should carry" 80% × $500,000 = $400,000, but actually carries only $300,000. A $100,000 loss with a $1,000 deductible pays: ($300,000 / $400,000) × $100,000 = $75,000, minus the $1,000 deductible = $74,000. The remaining $26,000 is the insured's coinsurance penalty for being underinsured.
Deductibles and how the penalty interacts
Note the order of operations the exam tests: apply the coinsurance ratio to the loss FIRST, then subtract the deductible — never the reverse. Also, coinsurance only reduces a payment when the insured is underinsured at the time of loss; if the insured carries the full required amount, the ratio is 1.0 and the full loss (less deductible) is paid, capped at the policy limit. A common distractor answer subtracts the deductible before applying the ratio, which overstates recovery.
Vacancy and the value question
The BPP itself defines a building as vacant when fewer than 31% of its square footage is rented and used, or when a building under construction is excepted. Whenever a worked problem mentions a building value, identify three numbers immediately — the value, the coinsurance requirement, and the amount carried — because those three drive the ratio. Misreading the "value" as the "limit carried" is the most frequent student error on these items.
A building is valued at $500,000 and is insured with an 80% coinsurance clause. The insured carries $300,000 of coverage. A covered loss of $100,000 occurs with a $1,000 deductible. How much does the insurer pay?
A tenant installs custom built-in cabinetry and flooring in a leased retail space. Under the BPP, these tenant's improvements and betterments are insured under which coverage?
The Vacancy Provision and Coverage Territory
The BPP (CP 00 10) adds a vacancy provision that the exam tests directly: if a building is vacant for more than 60 consecutive days before a loss, the insurer will not pay for vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft, and reduces all other covered losses by 15%. A building is "vacant" when it does not contain enough business personal property to conduct customary operations; for a tenant, only the rented unit is evaluated. Buildings under construction are not considered vacant.
Worked vacancy example: A building vacant 75 days suffers a $40,000 windstorm loss (not on the excluded vacancy list). The insurer pays the loss but reduces it 15%: $40,000 x 0.85 = $34,000 before the deductible. The same building's theft loss would be denied entirely because theft is on the excluded list during vacancy. Recognizing which perils drop out (the vandalism/theft/water/glass set) versus which merely take the 15% haircut is the precise distinction the question rewards.