9.2 Building and Personal Property Coverage Form (BPP)

The Building and Personal Property Coverage Form (CP 00 10)

The Building and Personal Property Coverage Form (CP 00 10) is the workhorse of commercial property insurance. It is a coverage form: it describes WHAT is covered but says nothing about WHICH perils — that comes from a separate Causes of Loss form (Section 9.3). The BPP offers three coverage categories, and each is insured only when a limit is entered on the declarations.

• Coverage A — Building: the structure named in the declarations, completed additions, fixtures, permanently installed machinery and equipment, and outdoor fixtures. It also includes personal property owned by the insured and used to maintain or service the building (appliances for refrigerating, cooking, dishwashing, laundering; fire extinguishing equipment; floor coverings).
• Coverage B — Your Business Personal Property (BPP): contents the insured owns and uses in the business — furniture, machinery, stock, and the insured's use interest in improvements and betterments.
• Coverage C — Personal Property of Others: property of others in the insured's care, custody, or control; loss is paid to the owner.

Covered Locations, Newly Acquired Property, and Sublimits

Property is covered while at the described premises (or within 100 feet for certain personal property). The form grants several built-in extensions:

These are additional coverages/extensions — some add to the limit, some are within it. The Newly Acquired extension is time-limited: coverage ends 30 days after acquisition, when the property is reported, or at policy expiration, whichever is first.

Coinsurance — the Most-Tested Numeric

The BPP includes a coinsurance clause (commonly 80%, 90%, or 100%). Coinsurance penalizes underinsurance. The recovery formula is:

(Amount carried ÷ Amount required) × Loss − Deductible = Payment (never more than the limit).

Worked example: A building worth $500,000 carries an 80% coinsurance clause. The required amount is 0.80 × $500,000 = $400,000. The insured bought only $300,000 of coverage. A fire causes a $100,000 loss with a $1,000 deductible.

• Ratio = $300,000 ÷ $400,000 = 0.75
• 0.75 × $100,000 = $75,000
• Less $1,000 deductible = $74,000 paid; the insured absorbs the remaining $26,000 as a coinsurance penalty.

Trap: Coinsurance applies to the value at the time of loss, not the value when the policy was written. Inflation can quietly push an insured below the required percentage.

Valuation: ACV vs. Replacement Cost

By default the BPP pays Actual Cash Value (ACV) = Replacement Cost − Depreciation. The Replacement Cost optional coverage (activated on the declarations) waives depreciation but only if the insured actually repairs or replaces the property; until then the insurer pays ACV. Stock is valued at selling price only if the optional Selling Price valuation is selected.

ACV example: A 10-year-old roof costs $30,000 new and has a 20-year life. Depreciation = 50%, so ACV = $15,000. Under Replacement Cost coverage the insured can collect the full $30,000 after replacing the roof.

Deductibles and Multiple Locations

The BPP applies a per-occurrence deductible that is subtracted after any coinsurance calculation — never before. A common error is deducting first; always compute the coinsurance payment, then subtract the deductible.

When several locations are scheduled, the form can be written on a specific (each location its own limit) or blanket basis. Under a true blanket limit covering buildings and contents, the coinsurance test uses the combined value of everything within the blanket, which usually requires 90% coinsurance and a signed Statement of Values. Blanket coverage lets a single limit float across locations, smoothing out swings in inventory.

Vacancy Provision — a Reliable Trap

The BPP imposes a vacancy penalty: if a building has been vacant for more than 60 consecutive days before a loss, the insurer will not pay at all for vandalism, sprinkler leakage (unless protected against freezing), building glass breakage, water damage, theft, or attempted theft, and reduces all other covered losses by 15%.

A building is "vacant" when it does not contain enough business personal property to conduct customary operations. For tenants, vacancy refers to the rented unit. Example: a covered $40,000 fire loss in a building vacant 75 days is reduced 15% to $34,000 before the deductible — fire is not on the no-pay list, so it is paid but penalized.

What the BPP Insures: The Three Coverage Categories

The Building and Personal Property Coverage Form (BPP) insures three categories, each scheduled separately on the declarations. Building includes the structure, permanently installed fixtures, machinery and equipment, and maintenance materials. Your Business Personal Property (BPP) covers furniture, stock, machinery not part of the building, and the insured's use interest in improvements and betterments. Personal Property of Others in the insured's care, custody, or control is covered, with loss payable to the owner. Knowing which category an item falls into determines which limit responds.

Coverage Extensions and Additional Coverages

The BPP grants additional coverages including debris removal (commonly 25% of the loss plus an additional amount), preservation of property, fire department service charge, and pollutant cleanup and removal (an annual aggregate). It also provides coverage extensions that apply only if the insured meets a coinsurance threshold (commonly 80%): newly acquired or constructed property, personal property off premises, outdoor property, and valuable papers and records. Each extension carries its own sublimit and time limit, classic detail-recall items.

Valuation, Coinsurance, and Optional Coverages

The BPP settles losses at actual cash value unless replacement cost is selected as an optional coverage. Other optional coverages modify the base form: agreed value suspends the coinsurance condition, inflation guard automatically increases limits, and replacement cost removes depreciation. The coinsurance condition (typically 80%, 90%, or 100%) penalizes underinsurance using the did-over-should formula. Matching the right optional coverage to a fact pattern, such as agreed value to escape a coinsurance penalty, is frequently tested.