9.2 Building and Personal Property Coverage Form (BPP)
Key Takeaways
- The BPP (CP 00 10) insures Coverage A Building, Coverage B Business Personal Property (including Tenant Improvements and Betterments), and Coverage C Personal Property of Others.
- Coverage extensions apply automatically at 80%+ coinsurance: Newly Acquired Building $250,000, Newly Acquired BPP $100,000, Property Off-Premises $10,000, Outdoor Property $1,000.
- ACV (replacement cost minus depreciation) is the default valuation; Replacement Cost must be elected and is paid only after repair or replacement.
- Coinsurance penalty: Payment = Loss x (Limit Carried / Limit Required) - deductible; Agreed Value suspends coinsurance.
- The flat per-occurrence deductible is subtracted once per loss, after any coinsurance adjustment.
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 (Section 9.3) states which perils apply. The form organizes covered property into three coverages, each insured only if a limit appears next to it on the declarations.
Coverage A - Building
The building shown in the declarations, completed additions, permanently installed fixtures, machinery and equipment, outdoor fixtures, and personal property the insured owns to maintain or service the building (fire extinguishers, appliances, floor coverings, refrigerating and ventilating equipment). Additions and alterations under construction are also Coverage A.
Coverage B - Your Business Personal Property
Property the insured owns and uses in business: furniture and fixtures, machinery and equipment, stock (raw materials, goods in process, finished goods, supplies), and labor or materials furnished on others' property. Critically, Tenant Improvements and Betterments are Coverage B - alterations the tenant made and cannot legally remove become part of the building, yet the tenant paid for them, so they fall under 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 described premises - customer goods being repaired, consigned merchandise, employee property. Loss payment goes to the owner. Coverage C is not full bailee coverage; high-value 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. Memorize the caps - they are heavily tested.
| Extension | Limit | Key terms |
|---|---|---|
| Newly Acquired or Constructed - Building | $250,000 per building | Up to 30 days; any new location |
| Newly Acquired - Business Personal Property | $100,000 per location | Up to 30 days |
| Personal Effects and Property of Others | $2,500 | At described premises; no theft |
| Valuable Papers and Records (other media) | $2,500 | Cost to research/restore |
| Property Off-Premises | $10,000 | Temporarily away; not in transit |
| Outdoor Property | $1,000 ($250 per tree/shrub/plant) | Fences, signs, antennas, trees |
Additional Coverages (Built In)
| Additional coverage | Amount |
|---|---|
| Debris Removal | 25% of the loss + deductible, plus an extra $25,000 if 25% is insufficient |
| Preservation of Property | Covered 30 days after property is moved to protect it |
| Fire Department Service Charge | Up to $1,000, no deductible |
| Pollutant Cleanup and Removal | Up to $10,000 per 12-month period, from a covered cause |
Valuation
| Method | How loss is paid | When used |
|---|---|---|
| Actual Cash Value (ACV) | Replacement cost minus depreciation | Default basis |
| Replacement Cost (RC) | Repair/replace like kind and quality, no depreciation | RC option on dec |
| Functional Replacement Cost | Functionally equivalent, often cheaper, materials | Older buildings |
| Agreed Value | Pre-agreed amount; suspends coinsurance | Hard-to-value property |
A tenant installs and pays for custom built-in shelving and a new HVAC system that it cannot legally remove at lease end. Under the BPP, how is this property classified?
Worked Example - ACV vs. RC
A 10-year-old roof costs $50,000 to replace and is depreciated 30 percent. Under ACV the insurer pays $50,000 - $15,000 = $35,000. Under the replacement-cost option the insurer pays the full $50,000, but RC settlements are paid only after the insured actually repairs or replaces (otherwise the insurer pays ACV until repairs are made).
Coinsurance Under the BPP
The BPP carries an 80 percent coinsurance clause by default (the percentage on the dec can be 80, 90, or 100). Coinsurance requires the insured to carry a limit equal to at least that percentage of the property's value at the time of loss. If the insured falls short, recovery is reduced by the formula:
Payment = Loss x (Limit Carried / Limit Required) - deductible
Worked example: A building is worth $1,000,000 and carries 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 x ($500,000 / $800,000) = $125,000 before the deductible. The penalty stops owners from insuring only the portion likely to burn. Buying the Agreed Value option suspends coinsurance by locking in a stipulated value.
Property NOT Covered
The BPP excludes accounts, bills, currency, money, and securities; land, water, growing crops, and standing timber; outdoor bridges, walks, roadways, and patios; vehicles licensed for road use; underground pipes and drains; excavation and grading costs; and electronic data (except a small additional coverage). Animals are covered only when owned by others and boarded, or held for sale.
Deductibles and Loss Payment
The BPP applies a flat per-occurrence deductible (commonly $500 or $1,000) subtracted once per loss event after any coinsurance adjustment. Wind/hail percentage deductibles can replace the flat deductible by endorsement in catastrophe-exposed states, calculated as a percentage of the building limit, not of the loss. The Mortgageholder condition protects a lender even if the insured's own claim is denied, provided the lender pays any premium the insured missed and reports hazard changes.
Common Traps
- ACV is the default; RC must be elected and is paid only after repair or replacement occurs.
- Tenant Improvements and Betterments are Coverage B, not Coverage A.
- Agreed Value suspends coinsurance; it does not waive the deductible.
- Outdoor Property's $1,000 cap with a $250-per-plant sublimit is a favorite distractor.
A warehouse valued at $1,000,000 carries an 80% coinsurance clause but is insured for only $600,000. After a $100,000 covered fire loss (ignore the deductible), how much will the insurer pay?