Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 4 minutes
Regardless of the business industry, many businesses face the risk of property damage. A power surge may sometimes lead to a fire, which could be covered if fire is a covered cause of loss.
Having the right Business Personal Property (BPP) coverage for these kinds of situations is vital. Keep reading if you have not heard of this coverage.
What is BPP Coverage?
BPP coverage applies to physical loss or damage to eligible business contents (equipment, furniture, inventory) caused by covered causes of loss, up to the policy limits and subject to deductibles, exclusions, and sublimits. It may not automatically cover lost income from downtime—that’s typically Business Income/Extra Expense coverage.
Your business personal property is typically not covered under your General Liability policy. However, many businesses purchase commercial property insurance or a BOP, which commonly includes BPP coverage for contents (subject to limits, deductibles, and exclusions).
What Will Your BPP Actually Protect?
What’s covered depends on your policy’s Causes of Loss form (often described as basic, broad, or special coverage). Many policies help cover events like fire and certain water damage, but ‘accidental damage’ is not universally covered, and water losses may have some limitations.
To help explain this kind of coverage, let’s imagine that you own a clothing store. There is a plumbing issue, and water comes pouring down from the floor above, ruining a lot of your inventory. Your BPP helps you to file a claim for this lost inventory, the ruined shelves where the leak took place, and the damaged electronics that got wet at the same time.
What Isn’t Covered?
As with all insurance policies, some items may not be covered by your BPP. You should be aware of these exclusions so that you aren’t in for a shock when something unfortunate happens.
· Vehicles that you drive for work, which are protected by commercial auto insurance
· Your actual work, building, or storefront
· Wear and tear
· Flood damage from storms or seasonal precipitation
Who Needs Business Personal Property (BPP) Coverage
The truth is that all businesses could benefit from this policy type. However, some companies need this sort of coverage more than others:
Off‑Premises, Jobsite, and In‑Transit Property Coverage
If you transport your business’s personal property from one location to another (job sites, trade shows, client locations) or deliver goods, confirm whether your policy includes an off‑premises / in‑transit extension and what the sublimit is. Many businesses need inland marine or property‑in‑transit coverage to match real-world exposure.
How Much Does BPP Coverage Cost?
This type of policy provides coverage similar to other business insurance policies. The cost of your premium may be based on the size of your business, location, coverage amount, and the risks associated with the industry. Price may also be based on policy type, such as if Replacement or Actual Cash Value cost is selected. These are other factors that might affect the cost of your policy:
· Operating in a risky industry
· The location that you operate out of/in
· The amount of coverage that you want to have
· Your claims history
We can look at an example to help explain why this kind of coverage is almost always worth the cost of the premium. Let’s talk about a small business that owns $25,000 in equipment that is critical to daily operations. There is a fire at the business location one day, and all of this equipment is lost in the fire. If you don’t have BPP protection, you probably need to pay for the cost to repair or replace the equipment almost entirely out of pocket.
Can you afford to do this? Most people couldn’t even if their business was a big success. This is why the small premium amount that you pay each year for BPP can really pay off in a big way when you really need help.
Loss severity varies widely. USFA nonresidential building fire estimates show $3.16B in direct dollar loss for 2023 (not including indirect costs like business interruption).
USA Business Insurance helps business owners request and compare insurance quote estimates from participating insurers, where available. The right coverage could help reduce the financial impact of covered losses from accidents, property damage, and certain weather-related events, subject to policy terms, limits, deductibles, and exclusions.
