Commercial Property

Direct Damage Coverage & the Mystery of Our Definitions

Robin Federici, CPCU, AAI, ARM, AINS, AIS,

CPIW

Fred’s Cell: 401-524-4567 Robin’s Cell: 401-529-9617

PO Box 781 North Kingstown, RI 02852

E-mail: EFEDERICI@IETA.BIZ ROBINF@IETA.BIZ

Web site: WWW.IETA.BIZ

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This material has been designed for use in training programs for insurance industry

personnel. It is not intended to be used as a complete reference resource on the programs

and coverages outlined herein.

The programs use “standard” policy forms and endorsements for the purposes of

discussing the exposures to loss that may exist, some of the coverage options available to

treat them, and to provide a framework for discussions with carriers you represent

concerning the programs they have available.

Coverages, rules and materials presented during this program may differ from those used

by individual insurance companies. Contact individual carriers for details about

interpretations of their eligibility requirements, particular insurance contracts and rates.

Copyright 2016 by Insurance Education & Training Associates, LLC. All rights

reserved. This document or any part thereof may not be reproduced or utilized in any

form or by any means, electronic or mechanical, including photocopying, recording, or

by any information retrieval system, without the express written consent of Insurance

Education & Training Associates, LLC. Inquires should be addressed to: PO Box 781,

North Kingstown, RI 02852 E-Mail: robinf@ieta.biz.

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BUILDING & PERSONAL PROPERTY

COVERAGE FORM (BPP)

This coverage form is not the entire policy. It must be combined

with the common declaration page, the common conditions form,

the common property declaration page, the commercial property

conditions form and one of the causes of loss forms to make a

complete policy.

THE BPP COVERAGE FORM DOES THE FOLLOWING:

Provides a detailed description of the covered property :

o Coverage A: Building

o Coverage B: Insured’s Business Personal Property, and

o Coverage C: Personal Property of Others

Outlines additional coverages and coverage extensions

Provides additional conditions: loss payment, coinsurance, and

mortgage provisions.

Also included are optional coverages that can be activated by

appropriate entries on the commercial property declaration page

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COVERED PROPERTY:

COVERAGE A: BUILDING

A. Coverage We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.

1. Covered Property

Covered Property, as used in this Coverage Part, means the type of property described in this Section, A.1., and limited in A.2., Property Not Covered, if a Limit of Insurance is shown in the Declarations for that type of property.

a. Building, meaning the building or structure described in the Declarations, including:

(1) Completed additions; (2) Fixtures, including outdoor fixtures; (3) Permanently installed:

(a) Machinery and (b) Equipment;

(4) Personal property owned by you that is used to maintain or service the building or structure or its premises, including:

(a) Fire extinguishing equipment; (b) Outdoor furniture; (c) Floor coverings; and (d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering;

(5) If not covered by other insurance: (a) Additions under construction, alterations and repairs to the building or structure; (b) Materials, equipment, supplies and temporary structures, on or within 100 feet of the described premises, used for making additions, alterations or repairs to the building or structure.

Coverage A can be broken down into several components:

Building vs. Structure

“Described premises”

Building means . . .

ISO Endorsements: Additional Building Property #CP 14 15 &

Tenants Building Glass Coverage # CP 14 70

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COVERED PROPERTY (continued):

COVERAGE B: YOUR BUSINESS PERSONAL PROPERTY

b. Your Business Personal Property consists of the following property located in or on the building or structure described in the Declarations or in the open (or in a vehicle) within 100 feet of the building or structure or within 100 feet of the premises described in the Declarations, whichever distance is greater:

(1) Furniture and fixtures; (2) Machinery and equipment; (3) "Stock"; (4) All other personal property owned by you and used in your business; (5) Labor, materials or services furnished or arranged by you on personal property of others; (6) Your use interest as tenant in improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions:

(a) Made a part of the building or structure you occupy but do not own; and (b) You acquired or made at your expense but cannot legally remove;

(7) Leased personal property for which you have a contractual responsibility to insure, unless otherwise provided for under Personal Property of Others.

Business Personal Property can be divided into 5 categories:

Location

Insured’s property

Insured’s work on property of others

Improvements and betterments (Tenants): Building owners may

want to consider adding the ISO endorsement “Additional

Property Not Covered” CP 14 20.

Leased personal property the insured is obligated to insure: An

alternative option to cover leased property is to use the ISO

endorsement “Leased Property” CP 14 60.

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COVERED PROPERTY (continued):

COVERAGE C: PERSONAL PROPERTY OF OTHERS

Personal property of others that does not qualify for insurance under your

business personal property can be insured in Coverage C.

c. Personal Property Of Others that is:

(1) In your care, custody or control; and (2) Located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the described premises. However, our payment for loss of or damage to personal property of others will only be for the account of the owner of the property.

o Up to $2,500 additional insurance is automatically provided

by a coverage extension of the insured’s business personal

property coverage (discussed later) to apply to personal

property of others in the care, custody, or control of the insured.

o The purchase of additional and specific personal property of

others coverage is appropriate when the insured needs

coverage of values in excess of the $2,500 amount provided by

the extension.

o There is no coverage on property of others--except for the

extension--unless coverage is activated by the appropriate entry

on the declarations page.

o Any loss to property of others is adjusted “for the account of

the owner of the property.” The loss conditions section details

adjustment of such losses.

Several carriers have filed their BPP to combine

the ISO Coverages B and C