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 insurance — the form most candidates see most often on the exam. It provides three coverages that the insured selects on the declarations by entering a limit next to each:

• Coverage A — Building: the structure, permanently installed fixtures, machinery and equipment, and outdoor fixtures.
• Coverage B — Your Business Personal Property (BPP): furniture, stock, machinery not permanently installed, and tenant's improvements and betterments.
• Coverage C — Personal Property of Others: property of others in the insured's care, custody, or control; loss is payable to the owner, not the insured.

Coverage Extensions and Additional Coverages

The CP 00 10 grants several built-in amounts that sit in addition to the policy limit. Know the exact dollar figures — they are heavily tested.

Newly acquired coverage requires the insured to report the new property and pay premium; the 30-day window simply prevents a coverage gap.

Tenant's Improvements and Betterments

A classic trap: improvements a tenant installs (built-in cabinets, custom lighting, partition walls) become part of the building and the tenant cannot remove them. Yet because the tenant — not the building owner — paid for them and uses them, they are insured under Coverage B (Business Personal Property), not Coverage A. The landlord's Coverage A covers the original structure; the tenant's Coverage B covers what the tenant added.

The Coinsurance Clause — Worked Example

The BPP carries an 80% coinsurance requirement by default (it can be written at 90% or 100%). If the insured carries less than the required amount, the loss payment is reduced by the coinsurance penalty:

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

Example: A building's replacement value is $500,000. The 80% coinsurance requirement is $400,000. The insured carries only $300,000 and suffers a $100,000 fire loss with a $1,000 deductible.

• Limit required = 80% × $500,000 = $400,000
• Penalty ratio = $300,000 ÷ $400,000 = 0.75
• Loss recovery = 0.75 × $100,000 = $75,000
• Less deductible = $75,000 − $1,000 = $74,000 paid

The insured absorbs the $25,000 coinsurance penalty plus the deductible for being underinsured.

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

The BPP is the core commercial property form. It insures three categories, each with its own limit:

Coverage Extensions and Additional Coverages

The BPP grants Additional Coverages (Debris Removal - 25% of loss plus $10,000; Preservation of Property; Fire Department Service Charge - $1,000; Pollutant Cleanup - $10,000/year) and Coverage Extensions that may need an 80% coinsurance to apply (Newly Acquired/Constructed property; Personal Property Off-Premises; Outdoor Property; Valuable Papers; Accounts Receivable).

Valuation Options

The BPP defaults to ACV but can be endorsed to Replacement Cost. Special valuation rules apply to stock (selling price if sold but not delivered), glass, and tenant improvements.

Worked Example

A tenant retailer insures Your Business Personal Property for $300,000 on a replacement-cost basis with 80% coinsurance. A fire destroys $120,000 (RC) of stock and fixtures; total BPP value at the time is $350,000, so the required limit is 80% x $350,000 = $280,000. Because the $300,000 carried limit exceeds the $280,000 requirement, no coinsurance penalty applies and the insurer pays the full $120,000 (less deductible) at replacement cost. Had the limit been only $200,000, the penalty factor ($200,000 / $280,000) would reduce the payment - the recurring coinsurance computation.

Property Not Covered and Tenant Improvements

The BPP lists property not covered: aircraft, autos held for sale, money/securities (use a Crime policy), land/water, and growing crops. Tenant's improvements and betterments - alterations a tenant makes to a leased space that legally become the landlord's - are insurable under the tenant's Your Business Personal Property, and are settled based on the unexpired lease term if not repaired. Recognizing that money and securities need a separate Crime policy, not the BPP, is a recurring exam point.

The BPP's valuation condition sets ACV as the default but allows replacement cost by selection on the declarations. For stock, a special rule pays selling price less discounts/expenses if the goods were already sold but not delivered. Newly acquired property is covered as a Coverage Extension - new buildings and personal property at new locations - for a limited time and dollar amount, contingent on reporting and (often) the 80% coinsurance condition being met.