7.1 Building and Personal Property Coverage Form (BPP): Covered Property & Extensions
Key Takeaways
- The ISO Building and Personal Property Coverage Form (CP 00 10) defines three distinct categories of insurable property: Building, Your Business Personal Property (YBPP), and Personal Property of Others (PPO).
- YBPP and PPO are covered while situated within the described building or in the open (or in a vehicle) within 100 feet of the described premises.
- The BPP includes six built-in Additional Coverages, including Debris Removal (up to 25% of direct physical loss plus deductible, plus an extra $25,000 buffer), Preservation of Property (30 days of all-risk protection), and Pollutant Clean-Up and Removal ($10,000 annual aggregate).
- When an 80% or higher coinsurance percentage or Agreed Value option applies, the policy unlocks seven Coverage Extensions, including Newly Acquired Property ($250,000 building / $100,000 personal property for 30 days) and Outdoor Property ($1,000 total / $250 per plant for five named perils only).
- Under the BPP Vacancy Condition, if a building remains vacant for more than 60 consecutive days prior to a loss, coverage for vandalism, sprinkler leakage, glass breakage, water damage, and theft is completely suspended, while payments for all other covered perils are reduced by 15%.
Building and Personal Property Coverage Form (BPP): Covered Property & Extensions
Exam Focus: The Insurance Services Office (ISO) Building and Personal Property Coverage Form (CP 00 10) is the core commercial property form tested on the New York Series 17-70 exam. Candidates must master the three distinct categories of covered property, the critical 100-foot perimeter rule, the calculation mechanics of the Debris Removal additional coverage, the coinsurance triggers for the seven Coverage Extensions, and the severe claims penalties imposed by the 60-day Vacancy Condition.
Architecture of the ISO Commercial Property Program
The ISO Commercial Property Program is designed on a modular basis. A complete commercial property coverage part consists of:
- Commercial Property Declarations Page: Identifies the named insured, premises locations, policy limits, deductibles, coinsurance percentages, and selected coverage forms.
- Common Policy Conditions (IL 00 17): Mandatory conditions governing cancellation, changes, examination of books, inspections, and assignment.
- Commercial Property Conditions (CP 00 90): Specialized conditions governing legal action against the insurer, concealment/misrepresentation, subrogation, and other insurance.
- Coverage Form: Establishes covered property, additional coverages, coverage extensions, and valuation provisions (primarily CP 00 10).
- Causes of Loss Form: Defines which perils are covered (Basic CP 10 10, Broad CP 10 20, or Special CP 10 30).
- Endorsements: Optional forms modifying coverage for specialized commercial exposures.
The Three Categories of Covered Property
The insuring agreement of the Building and Personal Property Coverage Form (CP 00 10) does not automatically cover all property on a commercial premises. Instead, it establishes three separate and distinct property categories. For coverage to apply, a specific limit of insurance must be entered on the declarations for that category.
1. Building
The Building category covers the building or structure described in the declarations, along with:
- Completed Additions: New wings, structural extensions, and permanently attached architectural elements.
- Fixtures: Including outdoor fixtures such as exterior light poles, attached flagpoles, and building-mounted signs (unattached outdoor signs are subject to separate sublimits).
- Permanently Installed Machinery and Equipment: Central boilers, HVAC units, elevators, built-in cranes, and permanent production lines.
- Personal Property Used to Maintain or Service the Building or Premises: Fire-extinguishing equipment, outdoor maintenance furniture, lawn mowers, snowblowers, floor coverings, and commercial appliances used for refrigerating, ventilating, cooking, dishwashing, or laundering.
- Additions Under Construction: Additions, alterations, and repairs under construction, including materials, equipment, supplies, and temporary structures on or within 100 feet of the described premises.
2. Your Business Personal Property (YBPP)
Your Business Personal Property covers commercial personal property owned by the named insured and used in the business. It must be situated in or on the described building, or in the open (or in a vehicle) within 100 feet of the described premises. YBPP encompasses:
- Furniture and Fixtures: Desks, chairs, filing cabinets, and retail display racks.
- Machinery and Equipment: Portable machinery, computers, power tools, and office electronics not permanently installed.
- Stock: Merchandise held in storage or for sale, raw materials, goods in process, and finished goods, including packaging supplies.
- All Other Personal Property Owned by the Insured and Used in the Business: Uniforms, tools, manuals, and office supplies.
- Labor, Materials, or Services Furnished on Personal Property of Others: The value of repair labor and parts added by the insured to a customer's property, though not the customer's property itself.
- Leased Personal Property: Personal property leased by the insured for which the insured has a contractual legal responsibility to insure.
- Tenants' Improvements and Betterments: Fixtures, alterations, installations, or additions made a part of the building that the tenant occupies but does not own, acquired or made at the tenant's expense, which cannot be legally removed.
3. Personal Property of Others (PPO)
Personal Property of Others covers personal property that is in the care, custody, or control of the named insured. Like YBPP, it must be located in or on the described building, or in the open (or in a vehicle) within 100 feet of the described premises.
- Coverage applies regardless of whether the insured is legally liable for the damage.
- Losses under this category are paid directly to the owner of the property, not to the named insured.
- Common applications include dry cleaners holding customer garments, computer repair shops servicing customer laptops, and machine shops machining customer parts.
| Property Category | Scope & Ownership | Location Requirement | Valuation Basis | Typical Examples |
|---|---|---|---|---|
| Building | Structure, completed additions, permanent fixtures, maintenance items | Described premises | Replacement Cost (RC) or Actual Cash Value (ACV) | Structure, central HVAC, elevators, snowblower, fire extinguishers |
| Your Business Personal Property (YBPP) | Owned property used in business, stock, unattached machinery, tenant improvements | In building or within 100 feet of premises | Replacement Cost or ACV (Stock at ACV or selling price if sold) | Inventory, office desks, cash registers, tenant-installed display walls |
| Personal Property of Others (PPO) | Property of third parties in the care, custody, or control of insured | In building or within 100 feet of premises | Actual Cash Value (paid to third-party owner) | Customer vehicles in repair bay, customer computers awaiting service |
Property Not Covered
To avoid catastrophic liability and duplicate coverage with specialized marine, aviation, or financial policies, form CP 00 10 specifically excludes certain classes of property under the Property Not Covered section:
- Financial Instruments: Accounts, bills, currency, food stamps, evidences of debt, money, notes, or securities.
- Electronic Data: Information, audio, video, or software recorded on electronic media (covered only under a limited Additional Coverage).
- Animals: Excluded unless held as stock inside buildings, or boarded by the insured.
- Motor Vehicles & Watercraft: Automobiles held for sale, licensed motor vehicles, and watercraft (including motors and accessories) while afloat.
- Foundations & Subterranean Property: Foundations of buildings, structures, machinery, or boilers if their foundations are below the lowest basement floor or the surface of the ground.
- Land & Water: Land (including land on which the property is located), water, growing crops, or lawns.
- Excavations & Underground Assets: Underground pipes, flues, or drains; retaining walls not part of the building; roadways, walks, patios, and paved surfaces.
- Outdoor Contraband: Property prohibited by law or illegal trade.
The Six Additional Coverages
Form CP 00 10 includes six built-in Additional Coverages. These apply automatically without requiring a specific coinsurance threshold or separate policy premium:
1. Debris Removal
Pays the reasonable expenses to remove debris of covered property damaged by a covered cause of loss.
- Standard Formula: Pays up to 25% of the total amount paid for the direct physical loss plus the deductible.
- Additional $25,000 Limit: If the actual debris removal expense exceeds the 25% limit, or if the sum of the direct loss payment and debris removal exceeds the total policy limit of insurance, the policy provides an additional $25,000 for debris removal at that location.
- Notice Requirement: Debris removal expenses must be reported in writing to the insurer within 180 days of the date of direct physical loss.
2. Preservation of Property
If it is necessary to move covered property from the described premises to preserve it from impending damage by a covered cause of loss, the policy covers that property while being moved and for up to 30 days at each location to which the property is moved. Coverage applies against any direct physical loss (all-risk), even if the peril causing the subsequent loss is otherwise excluded.
3. Fire Department Service Charge
Pays up to $1,000 for service charges incurred when a fire department is called to save or protect covered property, provided the charge is assumed by contract prior to the loss or required by local ordinance. This payment is in addition to policy limits, and no deductible applies.
4. Pollutant Clean-Up and Removal
Provides up to $10,000 annual aggregate per location to extract pollutants from land or water at the described premises if the discharge, dispersal, seepage, migration, release, or escape of the pollutants is caused by or results from a covered cause of loss during the policy period. Expenses must be reported in writing within 180 days of the loss.
5. Increased Cost of Construction
Pays up to $10,000 or 5% of the building limit of insurance, whichever is less, to cover the increased costs incurred to comply with the enforcement of building ordinances or laws regulating the construction, repair, or demolition of buildings following a covered physical loss. This coverage applies only if the building is insured on a Replacement Cost basis.
6. Electronic Data
Provides up to $2,500 annual aggregate to replace or restore electronic data that has been destroyed or corrupted by a covered cause of loss (including certain specified computer viruses and harmful code).
The Seven Coverage Extensions
Unlike Additional Coverages, the Coverage Extensions are available only if an 80% or higher coinsurance percentage (or an Agreed Value option) is shown on the commercial property declarations page. Coverage Extensions are payable in addition to the stated policy limits:
- Newly Acquired or Constructed Property:
- Buildings: Up to $250,000 per building for new buildings being constructed on the premises or newly acquired buildings intended for similar use or warehouse operations.
- Your Business Personal Property: Up to $100,000 per location for personal property at newly acquired locations.
- Time Limit: Coverage terminates 30 days after acquisition or construction commences, or upon reporting the values to the insurer, or upon policy expiration (whichever occurs first).
- Personal Effects and Property of Others: Provides up to $2,500 per described premises for personal effects owned by the insured, officers, partners, or employees, plus personal property of others in the insured's care, custody, and control. Theft of personal effects is strictly excluded.
- Valuable Papers and Records (Other Than Electronic Data): Provides up to $2,500 per described premises to research, reconstruct, or restore lost or damaged information on physical valuable papers and records (deeds, blueprints, physical files).
- Property Off-Premises: Provides up to $10,000 for covered property while temporarily at a location the insured does not own, lease, or operate; in storage at a leased location; or at conventions, fairs, or exhibitions. Excludes property in or on vehicles, or in the care of salespersons.
- Outdoor Property: Covers outdoor fences, radio and television antennas, signs (not attached to buildings), trees, shrubs, and plants. The maximum limit is $1,000 total, with a strict sublimit of $250 for any one tree, shrub, or plant.
[!WARNING] Limited Perils Trigger: Outdoor Property is covered only against five specific perils: Fire, Lightning, Explosion, Aircraft, and Riot/Civil Commotion. Losses caused by windstorm, hail, vehicular impact, or vandalism are strictly excluded under this extension.
- Non-Owned Detached Trailers: Provides up to $5,000 for direct loss to non-owned detached trailers used in the insured's business on the described premises, for which the insured has a contractual responsibility to insure. Coverage operates as excess over other collectible insurance.
- Business Personal Property Temporarily in Portable Storage Units: Provides up to $10,000 for YBPP located in portable storage units (such as PODS containers) situated within 100 feet of the described premises. Coverage terminates 90 days after the unit is placed on the premises.
The Vacancy Condition: 60 Consecutive Days
Claims adjusters in New York frequently encounter the Vacancy Condition of the BPP. A building is considered vacant unless at least 31% of its total square footage is rented to a tenant or used by the building owner to conduct customary operations. (For buildings under construction or substantial renovation, the building is never considered vacant).
If a building remains vacant for more than 60 consecutive days immediately preceding the date of physical loss:
- Complete Peril Suspensions (Zero Payment): The policy completely suspends and excludes coverage for losses caused by:
- Vandalism;
- Sprinkler leakage (unless the system was protected against freezing);
- Building glass breakage;
- Water damage;
- Theft or attempted theft.
- 15% Penalty on All Other Covered Perils: For any other covered cause of loss (such as fire, lightning, windstorm, or explosion), the amount that would otherwise be paid is reduced by 15%.
Claims Settlement Calculation Scenario
A commercial warehouse insured for $500,000 with a $1,000 deductible has stood vacant for 75 consecutive days. A catastrophic lightning strike ignites a fire causing $100,000 in damage, while trespassers smash $8,000 in exterior plate glass.
- Glass Claim: The $8,000 glass breakage loss is $0 (completely excluded) due to the 60-day vacancy rule.
- Fire Claim Calculation:
- Determine loss after deductible:
$100,000 - $1,000 = $99,000. - Apply the 15% vacancy reduction:
$99,000 × 15% = $14,850 reduction. - Insurer pays:
$99,000 - $14,850 = $84,150(or85% of $99,000).
- Determine loss after deductible:
A commercial retail building insured under an ISO Building and Personal Property Coverage Form (CP 00 10) suffers a direct fire loss of $100,000. The policy has a $200,000 building limit of insurance and a $1,000 deductible. The insured incurs $32,000 in reasonable debris removal expenses. Under the Debris Removal Additional Coverage, what total amount will the insurer pay for the combined direct loss and debris removal?
A commercial office building insured under form CP 00 10 has been vacant for 75 consecutive days (less than 20% occupied). A fire causes $80,000 in covered damage, and during the fire, vandals enter the structure, spraying graffiti and damaging interior fixtures to the extent of $15,000. Assuming a $1,000 deductible applies to the fire loss, how will the claims adjuster adjust this claim under the BPP Vacancy Condition?
An insured holding an ISO Building and Personal Property Coverage Form with an 80% coinsurance clause files a claim under the Outdoor Property Coverage Extension. Which of the following property damage losses is covered under this extension?