What Is Building and Personal Property Coverage Form?

Building and personal property coverage form is a type of commercial insurance policy designed to cover direct physical damage or loss to commercial property and its contents. This type of insurance defines specifically what property is covered—such as buildings and personal property, what property is not covered—such as cash and animals. The building and personal property coverage form will detail the losses covered, which may include fire and vandalism, but it will outline any additional coverages, exclusions and limitations, and insurance limits and deductibles.

Key Takeaways

  • Building and personal property coverage form is an insurance that covers physical damage to commercial property. 
  • If the building in which a business operates is owned, the policy will likely cover both the building and its personal property, but if the building is rented, it may only cover the personal property.
  • Policyholders should inspect their documents to make sure everything that should be covered is covered and purchase additional coverage if needed. 
  • Building coverage may insure items that are permanently attached to the building itself, while personal property coverage includes property that is not part of the building. 
  • Building and personal property coverage exclude land, water, plants, roadways, crops, shrubs, money, accounts, instruments, or trees.  

Understanding Building and Personal Property Coverage Form

It is important for policyholders to inspect their coverages when they take out a building and personal property coverage form policy to make sure everything that should be covered is covered. If the policy is inadequate, it's usually possible to purchase additional coverage.

Building and personal property coverage form excludes claims for loss or damage to land, water, bridges, roadways, and underground pipes or drains. The policy also excludes any loss to plants, crops, trees and shrubs. It will also exclude losses for certain types of personal property, including deeds, instruments, money, accounts, bills, and securities. Vehicles, watercraft, and aircraft—unless specifically named as insured property—are also excluded. 

Covered losses are considered items that are attached to a building, but loss due to wear and tear or dishonest employees aren’t considered to be covered. An insurer may offer additional coverage beyond the basic criteria. 

If electronic data is lost in a fire, flood, or other covered events, this coverage will recover the loss that may otherwise impact a business. This does not include data lost due to mistakes, actions of an employee, or the business’s own liability that caused the loss. Electronic data is a special consideration and would require an extra payment in addition to the regular premium.

Businesses located in regions that experience seasonal changes may experience seasonal variations in the value of property or materials. For example, a boating shop may experience a total loss during its peak season of summer rather than slower, colder seasons. 

Special Considerations

Coverages a policyholder should look for on a building and personal property coverage form depends on the nature of their needs and financial connections to the commercial property in question. Commercial property insurance policies cover two basic types of property—buildings (also called real property) and business personal property. 

If someone owns the building in which their business operates, a commercial policy should cover both the building and the BPP it contains. If renting or leasing, the proper commercial property insurance policy will cover only BPP.

Building coverage normally includes machines and equipment that are permanently installed, such as a furnace, boiler, and air conditioning equipment. Fixtures, or property that is permanently attached to the building such as a built-in bookcase or cabinet, are also covered. Floor coverings, appliances (like refrigerators and dishwashers), fire extinguishers, and outdoor furniture are usually considered BPP. 

BPP consists of owned property that is not part of a building and is not otherwise excluded. It includes office furniture, machines and equipment (if not attached to the building), raw materials, goods-in-process and finished goods. Improvements made to a leased building are covered if you paid for them and cannot be legally removed.

The limits of building and personal property form insurance apply separately to each occurrence, except for a small number of additional coverage specified in the policy. BPP coverage is not subject to an aggregate limit that caps a recoverable amount under that coverage during a policy year.