9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse Form: CP 00 10

The Building and Personal Property Coverage Form (BPP), CP 00 10, is the single most heavily tested commercial property form. It is a named-perils-by-attachment form (the perils come from a separate Causes of Loss form — section 9.3). The BPP defines what property is covered through three Coverage categories you select on the declarations.

The Three Coverage Categories

• Coverage A — Building: the described building/structure, completed additions, fixtures (including outdoor fixtures), permanently installed machinery and equipment, and personal property used to maintain or service the building (e.g., fire extinguishers, appliances for refrigerating/cooking, floor coverings).
• Coverage B — Your Business Personal Property (BPP/Contents): property owned by the insured used in business — furniture, fixtures, machinery, stock, and 'all other personal property' — located in or within 100 feet of the described premises.
• Coverage C — Personal Property of Others: property of others in the insured's care, custody, or control, located in or within 100 feet of the premises. Loss is payable to the owner, not the insured.

Coinsurance — The Signature Calculation

The BPP imposes 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. Underinsure, and the penalty applies:

Recovery = (Limit Carried / Limit Required) x Loss − Deductible

The 'Limit Required' equals the coinsurance percentage times the value at the time of loss. Always cap the answer at the policy limit, and apply the deductible last.

Worked Coinsurance Example

A building is worth $500,000 at the time of loss. The policy has an 80% coinsurance clause, a limit of $320,000, and a $1,000 deductible. A fire causes $200,000 in damage.

• Limit Required = 80% x $500,000 = $400,000
• Coinsurance ratio = $320,000 / $400,000 = 0.80
• Indemnity before deductible = 0.80 x $200,000 = $160,000
• Payment = $160,000 − $1,000 = $159,000

The insured 'self-insures' the 20% shortfall as a penalty for underinsuring. Had the insured carried the required $400,000, the ratio would be 1.0 and the full $199,000 (after deductible) would be paid.

Valuation and Coverage Extensions

The BPP default valuation is Actual Cash Value (ACV) — replacement cost minus depreciation — unless the optional Replacement Cost coverage is activated on the dec. Several built-in Coverage Extensions add limited coverage without reducing the main limit, including Newly Acquired or Constructed Property (up to $250,000 building / $100,000 BPP for 30 days), Personal Effects, Valuable Papers and Records, Property Off-Premises, and Outdoor Property. The form also includes four Additional Coverages: Debris Removal, Preservation of Property, Fire Department Service Charge, and Pollutant Cleanup and Removal.

ACV Worked Example

A 10-year-old roof costs $30,000 to replace today. With a 25-year useful life, accumulated depreciation is 10/25 = 40%. ACV = $30,000 − (40% x $30,000) = $30,000 − $12,000 = $18,000. Under ACV valuation the insured collects $18,000 (less deductible); under Replacement Cost coverage the insured can recover the full $30,000 but typically must actually repair or replace and may collect ACV first, then the depreciation 'holdback' once work is completed.

Property Not Covered and Deductible Mechanics

The BPP lists property NOT covered: currency, accounts, deeds, bills, food stamps, animals, automobiles held for sale, the cost of excavations/foundations below grade, land, water, growing crops, and outdoor signs (covered elsewhere). The standard deductible applies per occurrence to the entire loss after any coinsurance adjustment — sequence matters: apply the coinsurance ratio first, then subtract the deductible, and finally cap at the limit of insurance.

What the BPP Covers and Excludes

The Building and Personal Property Coverage Form (CP 00 10) insures three categories the insured selects: Building (the structure, fixtures, permanently installed equipment, and outdoor fixtures), Your Business Personal Property (contents the insured owns and uses - furniture, stock, machinery, tenant improvements), and Personal Property of Others in the insured's care, custody, or control. Land, water, growing crops, currency, accounts, vehicles licensed for road use, and similar items are excluded or addressed by other forms (crime, inland marine, commercial auto).

Coinsurance, Agreed Value, and Valuation Options

The BPP typically carries an 80%, 90%, or 100% coinsurance clause; underinsuring triggers the same proportional penalty as personal property. The form is normally written at ACV but a Replacement Cost option can be elected on the declarations. An Agreed Value option suspends coinsurance when the insured files a statement of values and carries the agreed limit, and an Inflation Guard automatically increases limits during the policy term. Knowing that coinsurance defaults apply unless agreed value is elected is a recurring commercial-property test point.

Coverage Extensions and Additional Coverages

The BPP grants additional coverages (debris removal, preservation of property, fire department service charge, pollutant cleanup with an annual cap, and increased cost of construction within limits) and coverage extensions (newly acquired or constructed property, personal effects, valuable papers, property off premises, and outdoor property such as signs and fences, each subject to its own sublimit). These extensions provide limited automatic coverage that supplements the chosen limits; the exam tests recognizing that, for example, newly acquired buildings are covered for a stated number of days up to a capped amount until reported.