9.2 Building and Personal Property Coverage Form (BPP)
Key Takeaways
- The BPP form (CP 00 10) provides three coverages: A Building, B Your Business Personal Property, and C Personal Property of Others.
- Coverage extensions add limited amounts at no extra premium when 80 percent or higher coinsurance is shown: newly acquired buildings $250,000 and BPP $100,000 for 30 days, off-premises $10,000, outdoor property $1,000 with $250 per plant.
- Actual Cash Value (replacement cost minus depreciation) is the default valuation unless the replacement-cost option appears on the declarations.
- Tenant Improvements and Betterments are insured under Coverage B even though they attach to the building.
- Default 80 percent coinsurance penalizes underinsurance using Payment = Loss times Limit Carried divided by Limit Required, less the deductible.
The CP 00 10 Framework
The Building and Personal Property (BPP) Coverage Form (CP 00 10) is the workhorse of commercial property. It states what is insured; a separate causes-of-loss form (Section 9.3) states which perils apply. Property is grouped into three coverages, each insured only if a limit appears beside it on the declarations.
Coverage A - Building
The building shown on the declarations, completed additions, permanently installed fixtures, machinery and equipment, outdoor fixtures, and personal property used to maintain or service the building such as fire extinguishers, appliances, and floor coverings. Additions under construction are also Coverage A.
Coverage B - Your Business Personal Property
Property the insured owns and uses in business: furniture and fixtures, machinery and equipment, stock (raw materials, goods in process, finished goods, supplies), and labor or materials furnished on others' property. Importantly, Tenant Improvements and Betterments are Coverage B - alterations a tenant made and cannot legally remove become part of the building, yet the tenant paid for them.
Coverage C - Personal Property of Others
Property of others in the insured's care, custody, or control at the described premises - customer goods being repaired, consigned merchandise, employee property. Loss payment goes to the owner. Coverage C is not full bailee coverage; large bailee exposures need an inland-marine floater.
Coverage Extensions (No Extra Premium)
When the declarations show 80 percent or higher coinsurance, these extensions add limited insurance automatically. Memorize the caps.
| Extension | Limit | Note |
|---|---|---|
| Newly Acquired Building | $250,000 per building | Up to 30 days |
| Newly Acquired BPP | $100,000 per location | Up to 30 days |
| Personal Effects / Property of Others | $2,500 | No theft |
| Valuable Papers and Records | $2,500 | Cost to research and restore |
| Property Off-Premises | $10,000 | Temporarily away; not in transit |
| Outdoor Property | $1,000 ($250 per tree, shrub, plant) | Fences, signs, antennas |
Additional Coverages (Built In)
| Additional coverage | Amount |
|---|---|
| Debris Removal | 25 percent of loss plus deductible, with an extra $25,000 if 25 percent is short |
| Preservation of Property | Covered 30 days after property is moved to protect it |
| Fire Department Service Charge | Up to $1,000, no deductible |
| Pollutant Cleanup and Removal | Up to $10,000 per 12-month period |
Valuation
| Method | How paid | When used |
|---|---|---|
| Actual Cash Value (ACV) | Replacement cost minus depreciation | Default |
| Replacement Cost (RC) | Like kind and quality, no depreciation | RC option elected |
| Agreed Value | Stipulated amount; suspends coinsurance | Hard-to-value property |
Worked Example - ACV Versus RC
A roof costs $50,000 to replace and is depreciated 30 percent. Under ACV the insurer pays $50,000 minus $15,000 = $35,000. Under the RC option the insurer pays the full $50,000, but RC is paid only after the insured actually repairs or replaces; until then the insurer advances ACV.
Coinsurance Under the BPP
The BPP carries an 80 percent coinsurance clause by default (the declarations may show 80, 90, or 100). The insured must carry a limit equal to at least that percentage of value at the time of loss. Falling short reduces recovery: Payment = Loss times (Limit Carried divided by Limit Required), less deductible.
Worked example: A building worth $1,000,000 with 80 percent coinsurance needs an $800,000 limit. The owner carried only $500,000. A $200,000 fire recovers $200,000 times ($500,000 divided by $800,000) = $125,000 before the deductible. Buying the Agreed Value option suspends coinsurance entirely.
Property Not Covered
The BPP excludes accounts, currency, money, and securities; land, water, growing crops; outdoor bridges, walks, and roadways; vehicles licensed for road use; underground pipes; the cost of excavations and grading; and most electronic data.
Mortgageholder and Deductible
The Mortgageholder condition protects a lender even if the insured's claim is denied for an act the lender did not commit, provided the lender pays any premium the insured missed and reports hazard changes. The BPP applies a flat per-occurrence deductible subtracted once per event after any coinsurance adjustment. In catastrophe-exposed states a percentage wind or named-storm deductible can replace the flat figure by endorsement; it is calculated on the building limit, not on the loss.
Loss Settlement Options
When a loss occurs, the BPP gives the insurer four settlement choices rather than leaving the method to the insured: pay the value of the lost property, pay the cost to repair it, rebuild with like kind and quality, or take the property at the agreed or appraised value and reimburse the insured. This is why an adjuster, not the policyholder, ultimately selects how a covered claim is paid within the policy terms, and it is a favorite distractor on settlement questions.
Pairing the BPP With a Causes-of-Loss Form
The BPP never stands alone; it is always joined to a causes-of-loss form (Section 9.3). The BPP supplies the insured property and limits, while the causes-of-loss form supplies the perils and most exclusions. If a stem asks whether theft of inventory is covered, the answer turns on which causes-of-loss form is attached, not on the BPP - the BPP merely confirms that stock is Coverage B property. Reading the two forms together is the only reliable way to answer a commercial property coverage question.
Common Traps
- ACV is the default; RC is paid only after repair or replacement actually occurs.
- Tenant Improvements and Betterments are Coverage B, not Coverage A.
- Outdoor property caps at $1,000 total and $250 per plant - a favorite distractor.
- Agreed Value suspends coinsurance but does not waive the deductible.
Tenant Improvements and Betterments are insured under which coverage of the BPP form?
A building worth $1,000,000 carries 80 percent coinsurance but is insured for only $500,000. How much does a $200,000 fire loss pay before the deductible?