9.2 Building and Personal Property Coverage Form (BPP)

The CP 00 10 Framework

The Building and Personal Property Coverage Form (CP 00 10) is the workhorse of commercial property. It provides three coverages the insured selects on the declarations, each with its own limit.

Coverage A — Building

The building itself plus completed additions, permanently installed fixtures and equipment, outdoor fixtures, and personal property used to maintain the building (such as appliances for refrigerating or cooking). The named insured must own the building or be a tenant who has contracted to insure it.

Coverage B — Your Business Personal Property (BPP)

Contents the insured owns and uses in business: furniture, machinery, stock, and — importantly — tenant's improvements and betterments. These are alterations a tenant makes to a leased space that cannot legally be removed; they are Coverage B even though they attach to the building.

Coverage C — Personal Property of Others

Property of others in the insured's care, custody, or control. Loss is paid to the owner, not to the insured.

Coverage Extensions (No Extra Premium)

If the insured carries at least 80 percent coinsurance (or the Value Reporting option), these extensions apply automatically.

Additional Coverages (Built In)

Valuation

Worked Example — ACV vs. RC

A roof costs $40,000 to replace new and is 50 percent depreciated. Under RC, the insured collects $40,000 (after repair). Under ACV, the insurer pays replacement cost minus depreciation: $40,000 − $20,000 = $20,000. RC is paid only after repair or replacement actually occurs; before that the insurer advances the ACV amount and pays the holdback when the work is done.

Coinsurance Under the BPP

The coinsurance clause penalizes underinsurance. The recovery formula is:

(Did carry ÷ Should carry) × Loss − Deductible

Worked example. A building worth $1,000,000 carries an 80% coinsurance clause, so the insured should carry $800,000. The insured actually carries only $600,000. A $100,000 loss occurs with a $1,000 deductible.

• Did/Should = $600,000 ÷ $800,000 = 0.75
• 0.75 × $100,000 = $75,000
• $75,000 − $1,000 = $74,000 paid

The insured absorbs the $26,000 shortfall as a coinsurance penalty. Agreed Value suspends coinsurance entirely, but it does not waive the deductible.

Mortgageholder and Deductible Provisions

The Mortgageholder condition protects the lender: it is paid even when the insured's own claim is denied for an act the lender did not commit, it receives separate notice of cancellation, and it may pay premium if the insured does not. The deductible applies per occurrence and is subtracted after coinsurance is applied, not before.

How a Coverage Form and Causes of Loss Form Work Together

The BPP says what property is covered and how much; the attached Causes of Loss form (9.3) says which perils trigger payment. Neither pays a claim alone — the exam expects you to know both must be present on the dec for coverage to exist.

Common Traps

• ACV is the default; many candidates wrongly assume RC. RC is paid only after repair or replacement actually occurs.
• Tenant Improvements and Betterments are Coverage B (BPP), not Coverage A, even though they attach to the building.
• Agreed Value suspends coinsurance — it does not waive the deductible.
• Coverage C loss is paid to the owner of the property, not to the named insured.

Property Not Covered

The BPP form excludes a defined list of property that must be insured elsewhere. Knowing the list prevents the common error of assuming the form is all-encompassing.

• Money and securities (insure under a Crime coverage part)
• Land, water, growing crops, and standing timber
• Vehicles licensed for road use (insure under Commercial Auto)
• Aircraft and watercraft
• Property in transit (insure under Inland Marine)
• Accounts, bills, and electronic data beyond stated sublimits
• Foundations below the lowest floor, bridges, and underground pipes/flues

Reporting a Loss and the Loss-Payment Order

After a loss the insured must give prompt notice, protect the property from further damage, prepare an inventory, and submit a signed, sworn proof of loss — typically within 60 days of the insurer's request. The insurer then has options: pay the value of the lost property, pay the cost to repair or replace, repair/rebuild it, or take all or part of the property at the agreed value. The mortgageholder's interest is paid out of the building loss before the insured if a mortgage clause is in force. These mechanics regularly appear as scenario questions distinguishing the insured's duties from the insurer's payment options.