9.2 Building and Personal Property Coverage Form (BPP)

The Building and Personal Property Coverage Form (CP 00 10)

The Building and Personal Property Coverage Form (BPP, CP 00 10) is the workhorse of commercial property insurance. It covers three categories of property at a described premises, and the declarations show a separate limit for each one that is being insured.

The three coverage categories are Building, Your Business Personal Property (BPP), and Personal Property of Others. A client may insure any one, two, or all three, and each carries its own limit of insurance.

What Each Coverage Includes

Stock means merchandise held for sale, raw materials, and in-process or finished goods.

Additional Coverages and Coverage Extensions

The BPP grants several Additional Coverages within the limit framework, including Debris Removal (25% of the loss plus deductible, with an extra $10,000 if needed), Preservation of Property (coverage while property is temporarily moved to protect it), Fire Department Service Charge ($1,000), and Pollutant Cleanup and Removal ($10,000 aggregate).

Coverage Extensions are available when an 80% coinsurance clause (or Value Reporting) applies. They include Newly Acquired or Constructed Property, Personal Effects and Property of Others, Valuable Papers and Records, Property Off-Premises, and Outdoor Property. Each has its own sublimit.

The 100-Foot Rule and Property Not Covered

A frequently tested rule: business personal property is covered while in the building or within 100 feet of the described premises. Property beyond 100 feet needs the Property Off-Premises extension or an inland marine form.

The form lists Property Not Covered, including money and securities (covered under crime forms), accounts and records (Valuable Papers), land, water, growing crops, vehicles licensed for road use, and the cost of excavations. Knowing these exclusions prevents over-promising coverage.

Tenant Improvements and Betterments

A tenant who installs flooring, partitions, or fixtures in a leased space cannot insure them as Building (they belong to the landlord legally), so they are covered as Your Business Personal Property under the category tenant improvements and betterments. If destroyed, settlement reflects the tenant's remaining use interest over the lease term. This is a favorite exam wrinkle: the build-out a tenant paid for is the tenant's insurable interest even though it is physically part of the landlord's building.

Coinsurance on the BPP and a Worked Penalty

The BPP normally carries an 80% coinsurance clause (90% or 100% are options). If the insured carries less than the required percentage of the property's value, a penalty reduces the loss payment by the ratio of insurance carried to insurance required.

Worked example: a building worth $1,000,000 requires 80% coinsurance = $800,000 of coverage. The insured buys only $600,000 and suffers a $200,000 loss. Recovery = ($600,000 / $800,000) × $200,000 = $150,000, minus deductible. The insured absorbs the $50,000 shortfall as a coinsurance penalty for underinsuring.

Reporting the Right Limit

Because the BPP is a fixed-limit form, the insured must set limits that keep pace with rising building costs and fluctuating inventory, or risk a coinsurance penalty at the worst possible time. Options like Agreed Value (suspends coinsurance), Inflation Guard (raises the limit automatically), and the Value Reporting form (premium tracks reported inventory) exist precisely to manage this exposure. The exam pairs an underinsured BPP loss with the option that would have prevented the penalty.

Putting the Categories Together

A complete BPP submission asks three questions: does the insured own the building, what business personal property does it have, and is it holding property of others? An owner-occupant insures Building and BPP; a tenant insures BPP (including tenant improvements) and perhaps property of others; a warehouse holding customers' goods needs the Personal Property of Others limit.

Each category carries its own limit on the declarations, and the deductible applies per occurrence. Because the form pays the lesser of the limit or the loss (subject to valuation and coinsurance), setting accurate limits is the producer's core duty. A frequent exam scenario gives a tenant whose expensive build-out is destroyed and asks under which coverage it is paid — Your Business Personal Property as tenant improvements and betterments, not Building, because the tenant, not the landlord, has the insurable interest in what the tenant paid to install.

Additional Coverages Recap and the 100-Foot Rule

Remember that the BPP grants Additional Coverages — Debris Removal (25% of the loss plus deductible, with up to $10,000 more), Preservation of Property, Fire Department Service Charge ($1,000), and Pollutant Cleanup ($10,000 aggregate) — and Coverage Extensions like Newly Acquired Property and Property Off-Premises when 80% coinsurance applies. The single most-tested operational rule remains the 100-foot limit: business personal property is covered in the building or within 100 feet of the premises, and anything farther needs the off-premises extension or an inland-marine form.