9.2 Building and Personal Property Coverage Form (BPP)

The Workhorse Property Form

The Building and Personal Property Coverage Form (BPP, ISO form CP 00 10) is the core commercial property coverage part. It defines what property is insured; a separate Causes of Loss form defines which perils are covered. Never confuse the two — the BPP plus a Causes of Loss form together create the working policy.

The BPP offers three property categories, each insured only if a limit appears for it on the declarations:

• Building — the structure, completed additions, permanently installed fixtures, machinery and equipment, and (if no other insurance) outdoor fixtures, plus materials within 100 feet used to maintain the building.
• Your Business Personal Property (BPP/contents) — the insured's own furniture, stock, machinery, and tenant improvements, while in the building or within 100 feet of the premises.
• Personal Property of Others — property of others in the insured's care, custody, or control; loss is paid to the owner.

A crucial scope rule: covered personal property must be in or on the described building or in the open (or in a vehicle) within 100 feet of the described premises. Property carried away or stored across town is not covered unless an extension or separate inland-marine form applies. Watch for stems that move a generator or stock '300 feet from the building' — that is outside the territory.

Tenant improvements and betterments — fixtures and alterations a tenant installs but cannot legally remove — are insured as the tenant's business personal property, not the landlord's building, because the tenant has an insurable interest in the use of those improvements during the lease.

Valuation and the Coinsurance Clause

The BPP default valuation is Actual Cash Value (ACV) — replacement cost minus depreciation. Replacement Cost applies only if the insured selects it on the declarations and repairs or replaces within a reasonable time.

Coinsurance

Most BPP policies carry an 80 percent coinsurance clause (90 or 100 percent options exist). The insured must carry a limit equal to at least the coinsurance percentage times the property value, or a penalty applies at the time of loss:

Recovery = (Limit Carried / Limit Required) x Loss − Deductible

Worked example. A building is worth $500,000. With 80 percent coinsurance the required limit is $400,000. The insured carries only $300,000 and suffers a $100,000 loss with a $1,000 deductible.

• Did/Should = $300,000 / $400,000 = 0.75
• 0.75 x $100,000 = $75,000, minus $1,000 deductible = $74,000 paid

The insured is penalized $25,000 (plus deductible) for underinsuring. Coinsurance is reconciled at the time of loss, not at issuance.

Why the penalty exists: coinsurance encourages insureds to insure to value. Most losses are partial, so an underinsured policyholder could otherwise pay a small premium yet still collect fully on every partial loss. The coinsurance clause restores fairness by reducing the partial-loss payment in proportion to the underinsurance. Note that the formula can never pay more than the policy limit or the actual loss, whichever is less, and the deductible is subtracted last.

The valuation choice interacts with coinsurance. When Replacement Cost is selected, the property value used in the coinsurance test is the full replacement cost, raising the required limit. Choosing RC while keeping an ACV-sized limit is a classic way insureds accidentally trigger a coinsurance penalty — a favorite exam scenario.

Extensions, Conditions, and Triggers

The BPP includes Coverage Extensions (often subject to a 75 percent coinsurance threshold) such as Newly Acquired or Constructed Property, Personal Effects, Valuable Papers, Property Off-Premises, and Outdoor Property. These provide modest additional limits.

Key conditions and traps:

• Vacancy — If a building is vacant beyond 60 consecutive days, the insurer will not pay for vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft, and reduces all other payable losses by 15 percent. A building is vacant when it has less than 31 percent of its square footage used for customary operations.
• Mortgageholder — A named mortgageholder is paid even if the insured's own claim is denied for an act or neglect of the insured.
• No-Coinsurance / Agreed Value — The Agreed Value option suspends coinsurance when an appraisal is filed.

The BPP also lists Additional Coverages that pay over and above the policy limit for specific costs. Debris Removal pays the cost to clear debris after a covered loss, generally up to 25 percent of the loss plus deductible, with an extra cushion available. Preservation of Property continues coverage for up to 30 days while property is moved to protect it from a covered peril. Fire Department Service Charge reimburses contractual charges (often up to $1,000), and Pollutant Cleanup and Removal pays a capped amount to remove pollutants caused by a covered peril.

Understand how the deductible interacts with these mechanics. A single per-occurrence deductible applies after the coinsurance penalty is calculated, and it applies once per occurrence even if several covered property categories are damaged. On the exam, always apply the order of operations: determine the covered amount, apply the coinsurance fraction if the insured is underinsured, cap at the policy limit, then subtract the deductible last.