7.2 Building and Personal Property Coverage Form

The CP 00 10 Framework

The Building and Personal Property (BPP) Coverage Form (CP 00 10) is the workhorse of commercial property. It says what is insured; a separate Causes of Loss form (7.3) says 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, and 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 of the property. 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 — they are heavily tested.

Additional Coverages (Built In)

Valuation

Worked Example — ACV vs. RC

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

Property NOT Covered

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

Coinsurance Under the BPP

The BPP carries an 80 percent coinsurance clause by default (the percentage is shown on the declarations and can be 80, 90, or 100). Coinsurance requires the insured to carry a limit equal to at least that percentage of the property's value at the time of loss. If the insured falls short, the recovery is reduced by the same formula used for business income: Payment = Loss × (Limit Carried ÷ Limit Required) − deductible.

Worked example: A building worth $1,000,000 carries 80 percent coinsurance, so the required limit is $800,000. The owner insured only $500,000. A $200,000 partial fire loss recovers $200,000 × ($500,000 ÷ $800,000) = $125,000 before the deductible. The penalty exists to stop owners from insuring only the portion likely to burn. Buying the Agreed Value option suspends coinsurance entirely by locking in a stipulated value.

How a Coverage Form and Causes of Loss Form Work Together

The BPP never stands alone. It is always paired with a Causes of Loss form (Section 7.3). The BPP defines the insured property and limits; the causes-of-loss form supplies the perils and most exclusions. On the exam, if a stem asks whether theft of inventory is covered, the answer turns on which causes-of-loss form is attached, not on the BPP — the BPP simply confirms stock is Coverage B property.

Mortgageholder and Loss-Payment Provisions

The BPP includes a Mortgageholder condition protecting a lender's interest even if the insured's own claim is denied for an act or neglect the lender did not commit, provided the mortgageholder pays any premium the insured failed to pay and notifies the insurer of hazard changes. Loss payment offers the insurer four options: pay the value, pay the cost to repair, rebuild with like kind and quality, or take the property at the agreed value and reimburse. These options are 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) that is 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, and those are calculated as a percentage of the building limit, not of the loss.

Common Traps

• The extensions are part of the policy limit only when a separate sublimit is not stated — outdoor property's $1,000 cap and $250-per-plant cap are favorite distractors.
• ACV is the default; many candidates wrongly assume RC, and RC is paid only after repair or replacement actually occurs.
• Tenant Improvements and Betterments are Coverage B, not Coverage A, even though they attach to the building.
• Agreed Value suspends coinsurance; it does not waive the deductible.