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 (BPP), ISO form CP 00 10, is the workhorse of commercial property insurance. It is a coverage form; it must be paired with a Causes of Loss form (covered in 9.3) and the Commercial Property Conditions (CP 00 90) plus the Common Policy Conditions to become complete coverage.

The BPP insures three categories of covered property. The insured selects which to cover on the declarations and assigns each a limit:

• Building — the structure, completed additions, permanently installed fixtures, machinery and equipment, and outdoor fixtures. Also includes maintenance/service equipment and certain personal property used to maintain the building.
• Your Business Personal Property (BPP) — contents the insured owns and uses in business: furniture, stock, machinery not part of the building, and tenant improvements/betterments. Covered while in or on 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.

Valuation, deductible, and Additional Coverages

The BPP's default loss valuation is Actual Cash Value (ACV) = replacement cost minus depreciation, unless Replacement Cost is elected on the declarations (an optional coverage). The standard deductible is $1,000 per occurrence and applies after the coinsurance calculation.

Key Additional Coverages built into CP 00 10 (small sublimits — know these numbers):

Coverage Extensions (require at least 80% coinsurance) include Newly Acquired or Constructed Property (buildings up to $250,000, business personal property up to $100,000, for 30 days), and Outdoor Property (limited; e.g., $1,000, max $250 per tree/shrub/plant).

ACV vs. Replacement Cost worked example

A store's display fixtures cost $20,000 new and are 40% depreciated when destroyed.

• ACV settlement: $20,000 x (1 - 0.40) = $12,000 (minus deductible).
• Replacement Cost settlement (if elected): the insurer pays the cost to replace with like kind and quality, $20,000 (minus deductible), but typically only after the insured actually repairs/replaces — until then the insurer may pay ACV and the balance once replacement occurs.

The trap: Replacement Cost is not automatic. If the declarations show ACV, the depreciated figure applies even if the insured assumed full reimbursement.

Coinsurance under the BPP

The BPP contains a coinsurance clause that requires the insured to carry a limit equal to a stated percentage (often 80%, 90%, or 100%) of the property's value at the time of loss. If the insured is underinsured, the insurer pays only a proportion of the loss using the standard formula:

Recovery = (Limit carried ÷ Limit required) x Loss − Deductible

Worked example: a building is worth $500,000 and carries 80% coinsurance, so the required limit is $500,000 x 80% = $400,000. The insured actually carries only $300,000. A covered fire causes $100,000 of damage with a $1,000 deductible.

Recovery = ($300,000 ÷ $400,000) x $100,000 = 0.75 x $100,000 = $75,000, minus the $1,000 deductible = $74,000. The insured absorbs the remaining $26,000 as a coinsurance penalty. Note the recovery is still capped at the policy limit, and the deductible is subtracted last.

Property NOT covered and key conditions

The BPP excludes several classes of property from the "covered property" definition regardless of the causes-of-loss form. Property not covered includes: money and securities (insure under crime coverage), accounts/bills/records of accounts receivable as such, land, water, growing crops and lawns, animals (unless owned as stock or boarded), aircraft and watercraft, and vehicles licensed for road use.

The Commercial Property Conditions form (CP 00 90) adds shared conditions such as Concealment/Misrepresentation/Fraud (voids coverage for intentional concealment of a material fact), Control of Property, Legal Action Against Us (a 2-year suit limitation in many states), Liberalization, No Benefit to Bailee, Other Insurance, Policy Period/Coverage Territory, and Transfer of Rights of Recovery (subrogation). A frequent trap: money, securities, and vehicles are not BPP property, so a producer must steer those exposures to crime, inland marine, or auto coverage.

What the BPP Covers and Excludes

The Building and Personal Property Coverage Form (CP 00 10) offers three property categories the insured selects on the declarations: Building, Your Business Personal Property (contents), and Personal Property of Others in the insured's care. Building includes completed additions, fixtures, permanently installed machinery, and outdoor fixtures; business personal property includes furniture, stock, machinery, and tenant's improvements and betterments.

Certain property is not covered without endorsement: money and securities (use a crime form), vehicles licensed for road use, outdoor signs/trees/plants beyond small extensions, and property in transit (use inland marine). Coverage applies at the described premises and within 100 feet for limited extensions, which is why off-site or in-transit exposures route to inland marine.