9.2 Building and Personal Property Coverage Form (BPP)

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 (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, plus completed additions; permanently installed fixtures, machinery, and equipment; outdoor fixtures; and personal property the insured owns that is used 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/materials furnished on others' property. Critically, Tenant Improvements and Betterments are Coverage B — fixtures and alterations the tenant made and cannot legally remove become part of the building, yet the tenant insured 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 while 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.

Additional Coverages (Built In)

Valuation and a Worked ACV Example

The default basis is Actual Cash Value (ACV) = replacement cost minus depreciation, unless the Replacement Cost (RC) option is shown on the declarations.

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 RC option the insurer pays the full $50,000, but RC is paid only after the insured actually repairs or replaces (otherwise the insurer pays ACV until repairs are made).

Agreed Value suspends coinsurance by locking in a stipulated value; Functional Replacement Cost rebuilds with cheaper functionally equivalent materials for older buildings.

Coinsurance Worked Example

The BPP carries an 80 percent coinsurance clause by default (80, 90, or 100 on the dec). The insured must carry a limit equal to at least that percentage of value at the time of loss. If short, recovery is reduced: Payment = Loss x (Limit Carried / Limit Required) - deductible.

A building worth $1,000,000 at 80 percent coinsurance requires $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.

Property NOT Covered

The BPP excludes accounts, bills, currency, money, securities; land, water, growing crops, standing timber; outdoor bridges, walks, roadways, patios; vehicles licensed for road use; underground pipes and drains; excavation/grading/backfill cost; and electronic data (except a small additional coverage). Animals are covered only when owned by others and boarded, or held for sale.

Mortgageholder and Loss Payment

The BPP includes a Mortgageholder condition protecting a lender's interest even if the insured's own claim is denied for an act the lender did not commit, provided the mortgageholder pays any premium the insured failed to pay and notifies the insurer of hazard changes. At loss payment the insurer has four options: pay the value of the property, pay the cost to repair, rebuild with like kind and quality, or take the property at the agreed value and reimburse. That is why an adjuster, not the insured, ultimately chooses the settlement method within policy terms.

Deductibles

The BPP applies a flat per-occurrence deductible (commonly $500 or $1,000) subtracted once per loss event after any coinsurance adjustment. Wind/hail or named-storm percentage deductibles can replace the flat deductible by endorsement in catastrophe-exposed states; those are calculated as a percentage of the building limit, not of the loss.

Common Traps

• ACV is the default; RC is paid only after repair or replacement actually occurs.
• Tenant Improvements and Betterments are Coverage B, not Coverage A.
• Outdoor property's $1,000 cap and $250-per-plant cap are favorite distractors.
• Agreed Value suspends coinsurance; it does not waive the deductible.