9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse of Commercial Property

The Building and Personal Property Coverage Form (CP 00 10) is the most-tested commercial property form. It insures three property categories at a described premises. Pair it with a Causes of Loss form (Section 9.3) and the Commercial Property Conditions (CP 00 90) to create a complete commercial property coverage part. The BPP is direct-damage coverage; it does not cover loss of income — that requires the Business Income form covered in Section 9.4.

The Three Coverage Categories

Note: "BPP" is used both for the form name and the Your Business Personal Property coverage — context tells you which. The form extends coverage to personal property in the open or in a vehicle within 100 feet of the described premises.

Coverage Extensions and Additional Coverages

The form grants automatic additional coverages and extensions (often subject to sublimits that do not reduce the policy limit unless stated):

• Debris Removal — 25% of the loss plus deductible, with an additional $25,000 if the cap is reached.
• Preservation of Property — covers property moved to safety from any cause for up to 30 days.
• Fire Department Service Charge — $1,000 (no deductible applies).
• Pollutant Cleanup and Removal — $10,000 annual aggregate.
• Newly Acquired or Constructed Property — up to $250,000 building / $100,000 personal property for 30 days (extension applies only if 80%+ coinsurance is shown).

Coinsurance and the ACV Settlement Math

The BPP carries a coinsurance clause (commonly 80%, 90%, or 100%) requiring the insured to carry a limit equal to that percentage of the property's value at the time of loss. If underinsured, the loss is penalized by the formula:

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

Worked example: A building is worth $1,000,000 with an 80% coinsurance clause, so the required limit is $800,000. The owner insured only $600,000 and suffers a $200,000 loss with a $5,000 deductible.

• Coinsurance factor = $600,000 ÷ $800,000 = 0.75
• Recoverable before deductible = 0.75 × $200,000 = $150,000
• Less $5,000 deductible = $145,000 paid

The $50,000 shortfall (penalty) is the insured's responsibility for not carrying adequate limits.

Valuation: ACV vs. Replacement Cost

The BPP default valuation is Actual Cash Value (ACV) = Replacement Cost − Depreciation. By selecting the Replacement Cost optional coverage on the declarations, settlement is on a new-for-old basis with no depreciation — but the insurer pays ACV first and the RC holdback only after repair/replacement is actually completed. Stock is valued at ACV unless the insured sold it, in which case selling price (less discounts/expenses) may apply. Always confirm whether the question gives you an RC or ACV scenario before applying coinsurance.

Property NOT Covered and the Deductible

The BPP lists specific property not covered, and the exam tests these exclusions of type (separate from peril exclusions): currency, deeds, accounts, bills, food stamps, and securities; land, water, growing crops, and lawns; outdoor signs, fences, and antennas (unless endorsed); motor vehicles licensed for road use; aircraft and watercraft; and the cost of excavations or foundations below the lowest basement floor.

A single flat dollar deductible applies per occurrence and is subtracted after any coinsurance penalty is calculated — order matters on exam math. If multiple buildings are damaged in one occurrence, one deductible typically applies to the combined loss, not one per building. Wind/hail in catastrophe-prone states may instead carry a separate percentage deductible (e.g., 2% of the building limit), which is computed on the limit, not the loss amount. Always read whether the question gives a flat or percentage deductible before computing the net payment.

What the BPP Covers and Excludes

The Building and Personal Property Coverage Form (CP 00 10) insures three categories: Building (the structure, fixtures, permanently installed machinery, and outdoor fixtures), Your Business Personal Property (contents the insured owns and uses — furniture, stock, machinery, leased property the insured must insure), and Personal Property of Others in the insured's care, custody, or control.

Property not covered includes land, water, growing crops, outdoor signs (limited), currency and accounts (covered under crime), vehicles licensed for road use, and the cost of excavations or foundations below grade. Coverage extensions broaden the form for newly acquired property, personal effects, valuable papers, outdoor property, and property off premises, each subject to a sublimit.

Coinsurance, Valuation, and Optional Coverages

The BPP carries a coinsurance clause (commonly 80%, 90%, or 100%) measured against the property's value at the time of loss, and settles at actual cash value unless replacement cost is elected on the declarations. Optional coverages added by entry on the declarations include Agreed Value (suspends coinsurance), Inflation Guard (automatically raises limits), and Replacement Cost. The form also offers a building-and-personal-property deductible applied per occurrence.

Understanding how coinsurance, valuation, and the deductible stack lets you walk a partial-loss settlement the same way as on the personal property exam: penalty first, then deductible, then limit cap.