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 (Section 9.3) states which perils apply. Property is organized into three coverages, each insured only when a limit appears beside it on the declarations.

Coverage A — Building

The described building and completed additions; permanently installed fixtures, machinery, and equipment; and personal property the insured owns to maintain or service the building, such as fire extinguishers, appliances, floor coverings, and ventilating equipment. Additions under construction are also Coverage A.

Coverage B — Your Business Personal Property

Property the insured owns and uses in the business: furniture and fixtures, machinery and equipment, and stock (raw materials, goods in process, finished goods, and supplies). Critically, Tenant Improvements and Betterments are Coverage B. Fixtures and alterations a tenant makes and cannot legally remove become part of the building, yet the tenant paid for them, so they sit under the tenant's business personal property.

Coverage C — Personal Property of Others

Property of others in the insured's care, custody, or control at the described premises, such as customer goods being repaired or consigned merchandise. Loss payment goes to the owner. Coverage C is not full bailee coverage; large 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. The caps are heavily tested.

Additional Coverages and Valuation

Valuation defaults to Actual Cash Value (ACV) — replacement cost minus depreciation — unless the Replacement Cost (RC) option appears on the declarations. Agreed Value suspends coinsurance for hard-to-value property.

Coinsurance and a Worked ACV Example

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

Worked example: a building worth $1,000,000 with 80 percent coinsurance needs an $800,000 limit. 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.

Worked ACV example: a 10-year-old roof costs $50,000 to replace and is depreciated 30 percent. Under ACV the insurer pays $50,000 minus $15,000 = $35,000. Under the RC option the insurer pays the full $50,000, but only after the insured actually repairs or replaces.

Property NOT Covered and Common Traps

The BPP excludes accounts, bills, currency, money, and securities; land, water, growing crops, and standing timber; outdoor bridges, walks, and roadways; vehicles licensed for road use; underground pipes and drains; and the cost of excavations and grading.

Common Traps

• Tenant Improvements and Betterments are Coverage B, not Coverage A, even though they attach to the building.
• ACV is the default; many candidates wrongly assume RC, which pays only after repair or replacement occurs.
• The Outdoor Property extension's $1,000 cap and $250-per-plant cap are favorite distractors.
• Agreed Value suspends coinsurance but does not waive the deductible.

What the BPP Covers

The Building and Personal Property Coverage Form (CP 00 10) is the core commercial property form, providing three coverages the insured selects on the declarations:

Tenant improvements and betterments are insured under Coverage B because the tenant paid for them even though they become part of the landlord's building - a classic exam point. Default valuation is ACV unless the replacement-cost option is shown on the declarations, and the form carries an 80% coinsurance clause by default.

Coverage Extensions and Coinsurance

The BPP grants several coverage extensions that add limited amounts at no extra premium when the insured carries at least 80% coinsurance:

• Newly acquired buildings - up to $250,000 each for 30 days
• Newly acquired business personal property - up to $100,000 each location for 30 days
• Personal property off premises - up to $10,000
• Outdoor property (fences, signs, trees/shrubs) - $1,000, no more than $250 per tree/shrub/plant
• Valuable papers and records and property at newly described premises - limited amounts

The 80% coinsurance penalty applies just as it does in personal lines: if the limit carried is less than the required limit (value times coinsurance percentage), recovery is reduced by the carried-over-required ratio. Selecting the Agreed Value option suspends coinsurance for the term.