What Is Business Personal Property Insurance (BPP)?

Mary Kate Morrow May 19, 2020

You may notice the acronym "BPP," which stands for "business personal property" in your commercial property insurance policy and are wondering, What exactly does business personal property insurance cover? The short answer is that BPP insurance covers any transportable items owned by a business. These transportable items are also known as business personal property. Despite its importance, business personal property insurance is one of the most underrated insurance coverages.

What Items Are Considered Business Personal Property?

Although coverage varies according to the insurance carrier and specific policy limits, common examples of business personal property include:

  • Office supplies: pens, highlighters and scissors

  • Electronics: smartphones, computers, printers and tablets

  • Upgrades: such as alterations, installations and additions

  • Furniture: desk chairs desks and meeting room tables

  • Furnishings: curtains, blinds and rugs

  • Heavy equipment: forklifts, machinery and excavators

  • Leased personal property that your business has a contractual responsibility to insure.

There are two different types of personal property, tangible and intangible property. Tangible property includes physical items that you can touch and see. These items can range from pieces of furniture to heavy machinery. Intangible property includes items such as bonds, copyrights, patents, trademarks and trade secrets. A business only needs to account for tangible personal property when getting a business personal property insurance estimate.

Creating an Inventory for BPP

In order to purchase the correct amount of commercial property insurance, business owners must decide which of their business's personal property needs coverage. Creating and maintaining an accurate inventory can greatly assist in the commercial insurance purchasing process. An inventory will also help you avoid forgetting to add on items under your BPP policy. Only with an accurate inventory can you estimate the net worth of your property individually, as well as the combined value.

An up-to-date inventory can also help business owners when it comes time to make changes to a commercial insurance policy. Remember, your policy should always grow alongside your business. As your operations expand, so should your insurance coverage, including your business personal property insurance coverage. It would be financially disastrous to your business if you were unable to get compensated for damaged or stolen business property. Every time you update your business's inventory with a major purchase, it is well worth it to amend your policy.

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What Items Are Not Covered by BPP?

Business personal property must be located at your business at all times in order to ensure coverage under your commercial property policy. If business personal property leaves your business's commercial space, you may need to purchase another type of policy for coverage in case of property damage, theft or loss. The best way to cover these items is with commercial inland marine coverage that will follow the property wherever it goes.

Additionally, If you have intangible business assets that you are concerned about, you may want to consider investing in insurance specifically designed to protect you, like intellectual property insurance.

Note that vehicles owned by companies are not considered business personal property. In order to protect company-owned vehicles, you must purchase a separate commercial auto insurance policy.

What about a home business? Homeowners insurance will not cover your business-related losses in most cases. If you have a home-based business, your business's equipment and technology will not be covered by your homeowners insurance policy either.

What Claims are Covered By Business Personal Property Insurance?

Business property insurance covers a wide range of disasters, ranging from bodily injury to natural disasters. Some of these claims could include:

  • Fire damage to property and contents within

  • Customer or client injury onsite

  • Thefts, including damage incurred during a break-in

  • Lost income incurred from business closure due to a covered event

Small business owners should identify potential risks and put preventative measures in place whenever possible to decrease their likelihood of needing to utilize their commercial insurance policy coverage. Doing so will not only mitigate risks that could hurt your business operation, but also will create a safer environment for employees and customers alike.

How Much Does Business Personal Property Insurance Cost?

Most industry professionals know that business personal property items are considered tax-deductible business expenses. Many business owners may be pleasantly surprised to find out that BPP insurance is also considered a tax-deductible business expense. In order to capitalize on this tax deduction, make sure to keep detailed financial records to provide to the IRS.

Business personal property insurance can be a part of your larger business owner policy "BOP" bundle. Generally, small business owners choose BOP's with a 1 million dollar occurrence limit. An occurrence limit is an amount covered for any single claim. The aggregate limit on this policy is $2 million. Aggregate limits are the lifetime of the policy, usually one year. The average cost for a $1 million occurence/$2 million aggregate policy is $1,217 per year with a median price tag of $638.

Interestingly, a BOP with double the occurrence and aggregate policy may not differ greatly in price, considering the increase in liability coverage. A BOP with $2 million occurrence / $4 million aggregate limit has an average cost of $1,288 per year and a median price tag of $713. Keep in mind that industry risks significantly impact policy costs. Higher risk industries will generally pay higher premiums. Contrarily, lower risk industries will generally pay lower premiums.

Commercial insurers need to factor in all that can go wrong that would require coverage. For this reason, a writer working remotely from a home office will likely enjoy much lower premiums than a jam-packed bar and restaurant. Both retail stores and construction businesses have higher coverage costs. Both retail and construction industries generally have valuable inventories and equipment on the premise as well as increased liability for third-parties.

Always be careful to understand the difference between actual cash value or the replacement value when you purchase a business personal property policy. The actual cash value is the item's current market price after taking into consideration depreciation of the item over time. Replacement value is the item's replacement cost if it was to be purchased brand-new.

Although replacement value policies generally carry a higher premium, they may be worth the purchase. If your item was to be damaged beyond repair, stolen, or destroyed, would you prefer to buy a replacement item instead of pocketing the depreciated actual cash value amount? Keep in mind that you may be required to replace or repair the item before receiving compensation from your commercial insurance company.

How Can I Secure the Best Policy Cost?

If your small business has no history of commercial insurance claims, you can expect to pay a lower insurance premium. Creating a risk management plan may also assist in both avoiding the need to file a claim, and in some cases may qualify you for a lower premium: Purchase a security system

  • Create and maintain procedural reviews and checklists

  • Develop training regimens for onboarding new employees

  • Mitigate workplace hazards

  • Strictly comply with safety guidelines

  • Compare commercial insurance rates

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