9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse Property Form

The Building and Personal Property Coverage Form, ISO CP 00 10, is the most-tested commercial property form on the national exam. It covers direct physical loss of or damage to a building, its contents, or the property of others at the described premises shown in the declarations. The BPP is not complete by itself: it must be paired with a Causes of Loss form (section 9.3) that specifies which perils are covered. Together the coverage form, the causes-of-loss form, the declarations, and any endorsements make up one commercial property coverage part.

The BPP can be written for an owner-occupant, a landlord, or a tenant, and the limits and coverages selected differ for each. A landlord typically insures Coverage A (Building); a tenant typically insures Coverage B (contents and its own improvements).

The Three Coverages: A, B, C

Limits are shown separately on the declarations for each coverage at each described premises:

Tenant trap: improvements and betterments a tenant pays to install become part of the realty but are insured under the tenant's Coverage B, not the landlord's Building coverage.

Valuation and the ACV Default

Unless the declarations show Replacement Cost, the BPP values losses at Actual Cash Value (ACV) — replacement cost minus depreciation. Selecting Replacement Cost on the declarations removes the depreciation deduction, but the insured generally must actually repair or replace, and stock is still valued at selling price less discounts only when so endorsed.

Worked ACV example: A 12-year-old rooftop HVAC unit (Coverage A) costs $30,000 new and has a 20-year life.

• Depreciation = (12 / 20) x $30,000 = $18,000
• ACV payable = $30,000 - $18,000 = $12,000 (before deductible)

Coinsurance — the 80% Standard

The BPP carries a coinsurance clause (commonly 80%, sometimes 90% or 100%). The insured must carry a limit equal to at least the coinsurance percentage times the property's value at the time of loss, or the insurer pays only a proportion of a partial loss.

Formula: Payment = (Limit Carried / Limit Required) x Loss - Deductible

Worked example: Building valued at $1,000,000, 80% coinsurance, so required limit = $800,000. The insured carries only $600,000. A $200,000 partial loss with a $2,500 deductible:

• Apply ratio: ($600,000 / $800,000) x $200,000 = 0.75 x $200,000 = $150,000
• Subtract deductible: $150,000 - $2,500 = $147,500 payable
• The insured absorbs the $50,000 coinsurance penalty plus the deductible.

Additional Coverages and Coverage Extensions

The BPP grants automatic amounts that, except where noted, do not erode the main limit:

• Debris Removal — 25% of the loss plus deductible, with an extra $25,000 if the basic limit is exhausted.
• Preservation of Property — covers property moved to protect it from loss (covered for 30 days).
• Fire Department Service Charge — up to $1,000 (no deductible).
• Pollutant Cleanup and Removal — up to $10,000 per 12 months.
• Newly Acquired or Constructed Property — up to $250,000 building / $100,000 BPP at new locations for 30 days.
• Personal Effects, Valuable Papers, Property Off-Premises, Outdoor Property — small extension limits.

Know the dollar figures: examiners love the 30-day newly acquired window and the 25% debris removal factor.

Vacancy and the Causes-of-Loss Pairing

The BPP carries a vacancy provision: if a building is vacant beyond 60 consecutive days before a loss, the insurer excludes vandalism, sprinkler leakage, glass breakage, theft, and water damage, and reduces all other covered payments by 15%. "Vacant" (under 31% occupied by the owner's business personal property) differs from "unoccupied."

The BPP alone grants no perils - it must be paired with a Causes of Loss form (Basic CP 10 10, Broad CP 10 20, or Special CP 10 30). Only the Special form includes theft and shifts the burden of proof to the insurer.

Trap: A 70-day-vacant building suffering vandalism gets nothing for that peril, and any otherwise-covered loss is cut 15%. Distinguish vacancy (empty of contents and people) from unoccupancy (furnished but nobody present).

Coverage Extensions and the Seasonal Increase

The BPP's automatic Coverage Extensions add small amounts of off-premises and incidental coverage: Newly Acquired or Constructed Property (up to $250,000 building / $100,000 BPP for 30 days), Personal Effects and Property of Others ($2,500), Valuable Papers and Records ($2,500), Property Off-Premises ($10,000), and Outdoor Property ($1,000). A seasonal increase automatically raises BPP limits (commonly 25%) when values run above the prior-year average.

Trap: Coverage Extensions (small, automatic) differ from Additional Coverages (debris removal, preservation of property). Both sit alongside the main limit, but the exam tests the 30-day newly-acquired window and the 25% debris removal factor by their exact figures.