9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse Form: CP 00 10

The Building and Personal Property Coverage Form (BPP), ISO CP 00 10, is the most heavily tested commercial property form. It insures three categories of covered property, each scheduled separately on the declarations:

1. Building — the structure described, completed additions, permanently installed fixtures/machinery/equipment, and outdoor fixtures. Also includes maintenance and service equipment, and (if not covered elsewhere) materials/supplies within 100 feet used to maintain the building.
2. Your Business Personal Property (BPP) — contents owned by the insured and used in the business: furniture, stock, machinery not part of the building, and the insured's labor/materials on others' property. Covered only while in or on the building or within 100 feet of the premises.
3. Personal Property of Others — property of others in the insured's care, custody, or control; loss is paid to the owner.

Property NOT Covered and Limited Property

The BPP excludes certain property outright and limits others. Tested items:

The special internal limits are favorite distractors. Note jewelry's limit applies only to losses by theft and is excess of small items, while furs apply to theft as well.

Coverage Extensions and Additional Coverages

The BPP grants Additional Coverages (these add coverage even at no extra limit selection) and Coverage Extensions (often requiring 80% coinsurance to apply):

• Debris Removal — pays the cost to remove debris of covered property from a covered cause of loss. Limit = 25% of the loss plus the deductible; an additional $25,000 is available if the 25% is exhausted or the loss equals the limit. There is a 180-day reporting window.
• Preservation of Property — covers property moved to protect it from loss, for up to 30 days at the new location, against direct physical loss from ANY cause during the move.
• Fire Department Service Charge — up to $1,000 (no deductible) for charges incurred under a contract.
• Pollutant Clean Up and Removal — up to $10,000 per 12-month period for cleanup if the release is caused by a covered peril.
• Coverage Extensions (apply when 80% coinsurance shown): Newly Acquired/Constructed Property (building up to $250,000; BPP up to $100,000 for 30 days), Personal Effects ($2,500), Valuable Papers ($2,500), Property Off-Premises ($10,000), Outdoor Property ($1,000, max $250/tree-shrub-plant).

What the BPP Insures and the Anniversary of Coinsurance

The Building and Personal Property Coverage Form (CP 00 10) splits covered property into three buckets, and the exam tests which bucket an item falls in.

Exam trap: Tenant's improvements and betterments are covered as Business Personal Property when the tenant made them and cannot legally remove them - not as Building, which the landlord insures.

The BPP Coinsurance Recap

The BPP carries a coinsurance clause (commonly 80%, 90%, or 100%); insuring below the required percentage triggers the carried/required ratio penalty on partial losses. The form offers Agreed Value (suspends coinsurance for the term), Inflation Guard (auto-increases the limit), and Selling Price valuation for finished stock the insured has sold but not delivered - paying the price the insured would have received rather than cost.

Loss Valuation: ACV vs. Replacement Cost

The default BPP valuation is Actual Cash Value (ACV) = replacement cost minus depreciation. If the insured selects Replacement Cost (CP 00 10 option or CP 04 40), losses are paid without deducting depreciation, but only if the property is actually repaired or replaced; otherwise the insurer pays ACV until replacement occurs.

Worked ACV example: A 10-year-old roof costs $30,000 to replace new. Its useful life is 25 years, so it has depreciated 40% ($12,000). ACV = $30,000 − $12,000 = $18,000. Under replacement cost coverage, the insured first receives the $18,000 ACV, then collects the held-back $12,000 after rebuilding the roof. The exam tests both the ACV math and the 'repair-first' trigger for the recoverable depreciation.

The Coinsurance Clause — Core Math

The BPP imposes a coinsurance requirement (commonly 80%, 90%, or 100% shown on the declarations) to encourage insuring to value. If the insured carries less than the required percentage of the property's value, the insurer pays only a proportion of a partial loss.

Coinsurance formula: (Limit Carried ÷ Limit Required) × Loss − Deductible = Payment

Worked example: A building worth $1,000,000 has an 80% coinsurance clause, so the required limit is $800,000. The insured carries only $600,000. A $200,000 fire loss occurs with a $1,000 deductible.

• Did insured meet requirement? $600,000 ÷ $800,000 = 0.75
• Payment = 0.75 × $200,000 = $150,000 − $1,000 = $149,000
• The insured absorbs the $50,000 coinsurance penalty plus the deductible.

If the insured had carried the full $800,000, the ratio would be 1.0 and the loss would be paid in full (subject to the deductible and policy limit).