Business Personal Property
Movable property owned by the insured used in business operations, including furniture, equipment, inventory, and supplies at the insured premises.
What It Is
Business Personal Property (BPP) is Coverage B on the Building and Personal Property Coverage Form (CP 00 10), covering movable property owned by the insured and used in business operations. BPP includes furniture, fixtures not permanently attached, machinery and equipment, stock and inventory, supplies, and all other personal property owned by the insured and used in the business.
BPP also includes tenant improvements and betterments (improvements made by a tenant to a leased space, at the tenant's expense), labor and materials the insured has expended on personal property of others, and leased personal property for which the insured has a contractual obligation to insure.
BPP is valued at replacement cost or actual cash value depending on the valuation endorsement selected. For inventory and stock, many policies default to selling price for finished goods rather than replacement cost, which can be advantageous for retailers and wholesalers. BPP coverage applies at the scheduled premises—coverage for property at other locations typically requires an inland marine floater.
Why It Matters for Brokers
BPP is frequently underinsured because businesses underestimate the total value of all their movable property. A comprehensive BPP inventory should include every piece of furniture, all equipment (from computers to forklifts), all inventory at every stage of production, all supplies, and tenant improvements. Brokers who conduct thorough BPP assessments often discover that actual values are 30-50% higher than the client's estimate.
Real-World Example
A machine shop estimates BPP at $400,000. The broker conducts a detailed inventory: CNC machines ($285,000), hand tools and precision instruments ($65,000), raw materials and work-in-progress ($110,000), office furniture and computers ($45,000), tenant improvements to the leased shop space ($75,000), and supplies ($20,000). Actual BPP: $600,000—50% higher than estimated. At 80% coinsurance, the $400,000 limit would trigger a coinsurance penalty on any claim: $400,000/$480,000 = 83% payment ratio. A $200,000 loss would pay only $166,667.
Common Mistakes
- 1Estimating BPP value by 'feel' rather than conducting a comprehensive inventory, routinely resulting in 30-50% underinsurance.
- 2Forgetting to include tenant improvements and betterments in the BPP calculation—these can represent significant value, especially for restaurants and retail tenants.
- 3Not adjusting BPP values for seasonal inventory fluctuations—a retailer's BPP may double or triple during holiday season, exceeding the stated limit.
How brokerageaudit.com Handles This
brokerageaudit.com's Submission Intake provides a BPP inventory worksheet organized by category (equipment, inventory, improvements, supplies) to ensure comprehensive valuation. The Policy Checker compares BPP limits against industry benchmarks for the insured's business type and square footage, flagging limits that appear inadequate. The system also checks coinsurance adequacy using the reported BPP values.