THE BOP VS THE CPP...
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BOP vs CPP
Michael C. D’Orlando, CIC, LIA, CPIA
Insurance Training & Consulting Services
11 Lake Shore Drive
Amesbury, MA 01913
mcdorlando@aol.com
(978) 314-5743
Bldg & Pers. Prop. Form (CP 00 10 06 07)
1. Covered Property
1. Covered 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.
Michael C. D'Orlando, CIC, LIA, CPIA
BOP (BP 00 03 01 10)
Page 1
a. Buildings, meaning the buildings and structures at the premises described in the Declarations, including:
(1) Completed additions;
(2) Fixtures, including outdoor fixtures;
(3) Permanently installed:
(a) Machinery; and
(b) Equipment;
(4) Your personal property in apartments,
rooms or common areas furnished by
you as landlord;
(5) Personal property owned by you that is
used to maintain or service the
buildings or structures or the premises,
including:
(a) Fire extinguishing equipment;
(b) Outdoor furniture;
(c) Floor coverings; and
(d) Appliances used for refrigerating,
ventilating, cooking, dishwashing
or laundering;
(6) If not covered by other insurance:
(a) Additions under construction,
alterations and repairs to the
buildings or structures;
(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 buildings or structures.
BOP vs CPP
I.
Property
A.
Building Coverage
1.
BOP building coverage includes landlord’s furnishings
2.
B&PP form covers them as personal property
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Michael C. D'Orlando, CIC, LIA, CPIA
Page 2
BOP vs CPP
Bldg & Pers. Prop. Form (CP 00 10 06 07)
1. Covered Property
…………………………….
b. Your Business Personal Property 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, consisting of the following unless otherwise specified in the Declarations or on the Your Business Personal Property – Separation of
Coverage form:
(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.
BOP (BP 00 03 01 10)
1. Covered Property
………………………………
b. Business Personal Property located in or on
the buildings at the described premises or in
the open (or in a vehicle) within 100 feet of
the described premises, including:
(1) Property you own that is used in your
business;
(2) Property of others that is in your care,
custody or control, except as otherwise
provided in Loss Payment Property Loss
Condition Paragraph E.5.d.(3)(b);
(3) Tenant's 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;
(4) Leased personal property which you
have a contractual responsibility to insure, unless otherwise provided for under Paragraph 1.b.(2); and
(5) Exterior building glass, if you are a tenant and no Limit of Insurance is shown in
the Declarations for Building property.
The glass must be owned by you or in
your care, custody or control.
.........................................................
5. Coverage Extensions
b. Personal Effects And Property Of Others
You may extend the insurance that applies to
Your Business Personal Property to apply to:
(1) Personal effects owned by you, your
officers, your partners or members, your
managers or your employees. This extension does not apply to loss or damage by theft.
(2)
B.
Personal property of others in your care,
custody or control.
The most we will pay for loss or damage
under this Extension is $2,500 at each described premises. Our payment for loss of
or damagePersonal
to personal
property of others
Business
Property
will only be for the account of the owner of
the property.
Michael C. D'Orlando, CIC, LIA, CPIA
Page 3
BOP vs CPP
1.
BOP automatically covers Personal Property of Others in the
insured’s care, custody or control
2.
B&PP form provides only $2,500 for property of others as a coverage
extension, unless a higher limit is specified on the Dec Page
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Michael C. D'Orlando, CIC, LIA, CPIA
Page 4
BOP vs CPP
Building & Pers. Prop. Form (CP 00 10 06 07)
2. Property Not Covered
Covered Property does not include:
a. Accounts, bills, currency, food stamps or
other evidences of debt, money, notes or
securities. Lottery tickets held for sale are
not securities;
means a set of related electronic instructtions which direct the operations and functions of a computer or device connected to
it, which enable the computer or device to
receive, process, store, retrieve or send
data. This Paragraph n., does not apply to
your "stock" of prepackaged software.
b. Animals, unless owned by others and
boarded by you, or if owned by you, only as
"stock" while inside of buildings;
o. The cost to replace or restore the information on valuable papers and records, includeing those which exist as electronic data.
Valuable papers and records include but
are not limited to proprietary information,
books of account, deeds, manuscripts, abstracts, drawings and card index systems.
Refer to the Coverage Extension for Valuable Papers And Records (Other Than
Electronic Data) for limited coverage for
valuable papers and records other than
those which exist as electronic data.
p. Vehicles or self-propelled machines (includeing aircraft or watercraft) that:
(1) Are licensed for use on public roads; or
(2) Are operated principally away from the
described premises.
This paragraph does not apply to:
(a) Vehicles or self-propelled machines or
autos you manufacture, process or
warehouse;
(b) Vehicles or self-propelled machines,
other than autos, you hold for sale;
c. Automobiles held for sale;
d. Bridges, roadways, walks, patios or other
paved surfaces;
e. Contraband, or property in the course of
illegal transportation or trade;
f. The cost of excavations, grading, backfilling
or filling;
g. Foundations of buildings, structures, machinery or boilers if their foundations are
below:
(1) The lowest basement floor; or
(2) The surface of the ground, if there is no
basement;
h. Land (including land on which the property
is located), water, growing crops or lawns;
i. Personal property while airborne or waterborne;
j. Bulkheads, pilings, piers, wharves or docks;
k. Property that is covered under another
coverage form of this or any other policy in
which it is more specifically described,
except for the excess of the amount due
(whether you can collect on it or not) from
that other insurance;
l. Retaining walls that are not part of a building;
m. Underground pipes, flues or drains;
n. Electronic data, except as provided under
Additional Coverages – Electronic Data.
Electronic data means information, facts or
computer programs stored as or on, created
or used on, or transmitted to or from computer software (including systems and applications software), on hard or floppy disks,
CD-ROMs, tapes, drives, cells, data processing devices or any other repositories of
computer software which are used with
electronically controlled equipment. The
term computer
BOPprograms, referred to in the
foregoing description of electronic data,
Michael C. D'Orlando, CIC, LIA, CPIA
Page 5
(c) Rowboats or canoes out of water at the
described premises; or
(d) Trailers, but only to the extent provided
for in the Coverage Extension for NonOwned Detached Trailers.
q. The following property while outside of
buildings:
(1) Grain, hay, straw or other crops;
(2) Fences, radio or television antennas
(including satellite dishes) and their leadin wiring, masts or towers, trees, shrubs
or plants (other than "stock" of trees,
shrubs or plants), all except as provided
in the Coverage Extensions.
BOP vs CPP
C.
Property Not Covered
BOP
2. Property Not Covered
Covered Property does not include:
a. Aircraft, automobiles, motortrucks and other
vehicles subject to motor vehicle registration;
b.
c.
d.
e.
"Money" or "securities" except as provided
in the:
(1) Money and Securities Optional Coverage; or
(2) Employee Dishonesty Optional Coverage;
Contraband, or property in the course of
illegal transportation or trade;
Land (including land on which the property
is located), water, growing crops or lawns;
Outdoor fences, radio or television antennas (including satellite dishes) and their
lead-in wiring, masts or towers, signs (other
than signs attached to buildings), trees,
shrubs or plants, all except as provided in
the:
(1) Outdoor Property Coverage Extension;
or
(2) Outdoor Signs Optional Coverage;
f.
Watercraft (including motors, equipment
and accessories) while afloat;
g. Accounts, bills, food stamps, other evidences of debt, accounts receivable or
"valuable papers and records"; except as
otherwise provided in this policy;
h. "Computer(s)" which are permanently installed or designed to be permanently installed in any aircraft, watercraft, motortruck
or other vehicle subject to motor vehicle
registration. This paragraph does not apply
to "computer(s)" while held as "stock";
i. "Electronic Data", except as provided under
Additional Coverages – Electronic Data.
This Paragraph i. does not apply to your
"stock" of prepackaged software.
j.
The following are Not covered on the
B&PP form, but Are covered on the
BOP:
d. Bridges, roadways, walks, patios
or other paved surfaces
f. The cost of excavations, grading,
backfilling or filling
g. Foundations of buildings, structures, machinery or boilers if their
foundations are below:
(1) The lowest basement floor; or
(2) The surface of the ground, if
there is no basement
i. Personal property while airborne
or water-borne
j. Bulkheads, pilings, piers, wharves
or docks
k. Property that is covered under
another coverage form of this or
any other policy in which it is
more specifically described,
except for the excess of the
amount due (whether you can
collect on it or not) from that
other insurance
l. Retaining walls that are not part
of a building
Animals, unless owned by others and
boarded by you, or if owned by you, only as
“stock” while inside of buildings
Michael C. D'Orlando, CIC, LIA, CPIA
Page 6
BOP vs CPP
D.
Additional Coverages
1.
Both forms include the following:
a.
Debris Removal ... 25% of paid loss plus deductible, plus
additional $10,000, if needed (Note: B&PP ‘12 ed. &
BOP ’13 ed. Increased to $25,000)
b.
Preservation of Property ... true “all-risk” coverage!
c.
Fire Department Service Charge
(1)
(2)
Difference
d.
Pollutant Clean Up and Removal ... $10,000 annual
aggregate
e.
Increased Cost of Construction
(1)
(2)
Difference
f.
Difference
B&PP form = $1,000
BOP = $2,500
B&PP form = Lesser of $10,000 or 5% of limit
BOP = $10,000
Electronic Data
(1)
(2)
Michael C. D'Orlando, CIC, LIA, CPIA
B&PP form = $2,500 annual aggregate
BOP = $10,000 annual aggregate
Page 7
BOP vs CPP
2.
BOP adds more Additional Coverages not found in B&PP form:
a.
Business Income ... 12 months actual loss sustained
•
b.
No dollar limit, but time cannot be increased
Extended Business Income ... 30 days
•
Again, no dollar limit, but time cannot be increased
c.
Extra Expense ... 12 months actual loss sustained
d.
Civil Authority ... 3 weeks - Business Income & Extra
Expense
e.
Interruption of Computer Operations ... $10,000 annual
aggregate
f.
Business Income from Dependent Properties ... $5,000
g.
Money Orders & Counterfeit Money ... $1,000
h.
Forgery or Alteration ... $2,500
i.
Fire Extinguisher Systems Recharge ... $5,000
Michael C. D'Orlando, CIC, LIA, CPIA
Page 8
BOP vs CPP
Building & Pers. Prop. Form
BOP
b. Personal Property Off Premises
You may extend the insurance provided by
this policy to apply to your Covered Property, other than "money" and "securities",
"valuable papers and records" or accounts
receivable, while it is in the course of transit
or at a premises you do not own, lease or
operate. The most we will pay for loss or
damage under this Extension is $10,000.
d. Property Off-Premises
(1) You may extend the insurance provided
by this Coverage Form to apply to your
Covered Property while it is away from
the described premises, if it is:
(a) Temporarily at a location you do not
own, lease or operate;
(b) In storage at a location you lease,
provided the lease was executed after the beginning of the current policy
term; or
(c) At any fair, trade show or exhibition.
(2) This Extension does not apply to prop
erty:
(a) In or on a vehicle; or
(b) In the care, custody or control of your
salespersons, unless the property is
in such care, custody or control at a
fair, trade show or exhibition.
(3) The most we will pay for loss or damage
under this Extension is $10,000.
c. Outdoor Property
You may extend the insurance provided by
this policy to apply to your outdoor fences,
radio and television antennas (including
satellite dishes), signs (other than signs attached to buildings), trees, shrubs and
plants, including debris removal expense.
Loss or damage must be caused by or result from any of the following causes of
loss:
(1)Fire;
(2)Lightning;
(3)Explosion;
(4)Riot or Civil Commotion; or
(5)Aircraft.
e. Outdoor Property
You may extend the insurance provided by
this Coverage Form to apply to your outdoor
fences, radio and television antennas (including satellite dishes), trees, shrubs and
plants (other than "stock" of trees, shrubs or
plants), including debris removal expense,
caused by or resulting from any of the
following causes of loss if they are Covered
Causes of Loss:
(1)Fire;
(2)Lightning;
(3)Explosion;
The most we will pay for loss or damage
under this Extension is $2,500, but not
more than $1,000 for any one tree, shrub or
plant.
(4)Riot or Civil Commotion; or
(5)Aircraft.
The most we will pay for loss or damage
under this Extension is $1,000, but not
more than $250 for any one tree, shrub or
plant. These limits apply to any one occurrence, regardless of the types or number of
items lost or damaged in that occurrence.
Michael C. D'Orlando, CIC, LIA, CPIA
Page 9
BOP vs CPP
E. Coverage Extensions
1.
Both forms include:
a.
Newly Acquired or Constructed Property ... $250,000
building ... $100,000 Personal Property
b.
Valuable Papers & Records
(1)
(2)
Difference
c.
Property Off-Premises ... $10,000
(1)
(2)
Difference
d.
B&PP form ... $10,000 with numerous limitations
BOP ... $10,000 at locations not owned, leased or
operated by insured and while in transit
Outdoor Property
(1)
Difference
(2)
e.
B&PP form = $2,500
BOP = $10,000 on premises/$5,000 off premises
B&PP form = $1,000 total / $250 max per tree,
shrub or plant
BOP = $2,500 total / $1,000 max per tree, shrub
or plant
Personal Effects ... $2,500
Michael C. D'Orlando, CIC, LIA, CPIA
Page 10
BOP vs CPP
2.
B&PP form includes coverage for Non-Owned Detached Trailers, not
found in BOP ...
f.
Non-Owned Detached Trailers
(1) You may extend the insurance that
applies to Your Business Personal
Property to apply to loss or damage to
trailers that you do not own, provided
that:
(a) The trailer is used in your business;
(b) The trailer is in your care, custody or
control at the premises described in
the Declarations; and
(2)
(3)
(4)
Michael C. D'Orlando, CIC, LIA, CPIA
(c) You have a contractual responsibility
to pay for loss or damage to the
trailer.
We will not pay for any loss or damage
that occurs:
(a) While the trailer is attached to any
motor vehicle or motorized conveyance, whether or not the motor vehicle or motorized conveyance is in
motion;
(b) During hitching or unhitching operations, or when a trailer becomes accidentally unhitched from a motor
vehicle or motorized conveyance.
The most we will pay for loss or damage
under this Extension is $5,000, unless a
higher limit is shown in the Declarations.
This insurance is excess over the
amount due (whether you can collect on
it or not) from any other insurance covering such property.
Page 11
BOP vs CPP
3.
BOP includes Accounts Receivable, not found in B&PP form ...
f. Accounts Receivable
(1) You may extend the insurance that
applies to Business Personal Property
to apply to accounts receivable. We will
pay:
(a) All amounts due from your customers that you are unable to collect;
(b) Interest charges on any loan required to offset amounts you are unable to collect pending our payment
of these amounts;
(c) Collection expenses in excess of
your normal collection expenses that
are made necessary by loss or damage; and
(d) Other reasonable expenses that you
incur to re-establish your records of
accounts receivable;
that result from direct physical loss or
damage by any Covered Cause of Loss
to your records of accounts receivable.
(2) The most we will pay under this Coverage Extension for loss or damage in any
one occurrence at the described premises is $10,000, unless a higher Limit of
Insurance for accounts receivable is
shown in the Declarations.
For accounts receivable not at the described premises, the most we will pay is
$5,000.
Michael C. D'Orlando, CIC, LIA, CPIA
Page 12
BOP vs CPP
BOP
4. Building Limit – Automatic Increase
a. The Limit of Insurance for Buildings will
automatically increase by the annual percentage shown in the Declarations.
b. The amount of increase will be:
(1) The Building limit that applied on the
most recent of the policy inception date,
the policy anniversary date, or any other
policy
change
amending
the Building
limit, times
(2) The
percentage
of
annual
increase
shown in the Declarations, expressed
as a decimal (example: 8% is .08), times
(3) The number of days since the beginning
of the current policy year, or the effecttive date of the most recent policy
change amending the Building limit, divided by 365.
Example:
If: The
applicable
Building
limit
is
$100,000.
The
annual
percentage
increase is 8%. The number of days
since the beginning of the policy year
(or last policy change) is 146.
The amount of increase is
$100,000 x .08 x 146 ÷ 365 = $3,200.
5. Business Personal Property Limit –
Seasonal Increase
a. The Limit of Insurance for Business Personal Property will automatically increase
by 25% to provide for seasonal variations.
b. This increase will apply only if the Limit of
Insurance
shown
for
Business
Personal
Property in the Declarations is at least
100% of your average monthly values during the lesser of:
(1) The 12 months immediately preceding
the date the loss or damage occurs; or
(2) The period of time you have been in
business as of the date the loss or damage occurs.
Michael C. D'Orlando, CIC, LIA, CPIA
Page 13
BOP vs CPP
F.
G.
Exclusions
1.
BOP Power Failure exclusion does not apply to loss to
computers and electronic data
2.
BOP Mechanical Breakdown exclusion does not apply to
computers
Limits of Insurance
1.
BOP has a built-in inflation guard ... Building Limit –
Automatic Increase
2.
BOP includes Business Personal Property Limit – Seasonal
Increase (a “mini-peak season endorsement”)
Michael C. D'Orlando, CIC, LIA, CPIA
Page 14
BOP vs CPP
d.
Except
as
provided
in
Paragraphs
through (7) below, we will determine
value of Covered Property as follows:
(2)
the
(1) At replacement cost without deduction
for depreciation, subject to the following:
(a) If, at the time of loss, the Limit of
Insurance on the lost or damaged
property is 80% or more of the full
replacement cost of the property
immediately before the loss, we will
pay the cost to repair or replace, after application of the deductible and
without deduction for depreciation,
but not more than the least of the following amounts:
(i) The Limit of Insurance under
Section I – Property that applies
to the lost or damaged property;
(ii) The cost to replace, on the same
premises, the lost or damaged
property with other property:
i. Of comparable material and
quality; and
ii. Used for the same purpose; or
(iii) The amount that you actually
spend that is necessary to repair
or replace the lost or damaged
property.
If a building is rebuilt at a new premises,
the cost is limited to the cost which
would have been incurred had the
building been built at the original
premises.
(b) If, at the time of loss, the Limit of
Insurance applicable to the lost or
damaged property is less than 80% of the
full replacement cost of the property
immediately before the loss, we will pay
the greater of the following amounts, but
not more than the Limit of Insurance that
applies to the property:
(i) The actual cash value of the lost or
damaged property; or
(ii) A proportion of the cost to repair or
replace the lost or damaged property,
after application of the deductible and
without deduction for depreciation.
This proportion will equal the ratio of
the applicable Limit of Insurance to
80% of the cost of repair or
replacement.
Michael C. D'Orlando, CIC, LIA, CPIA
Page 15
BOP vs CPP
H.
Property Loss Conditions (Good News/Bad News)
1.
BOP does not have coinsurance
2.
BOP has valuation clause similar to Homeowners Policy
Michael C. D'Orlando, CIC, LIA, CPIA
Page 16
BOP vs CPP
I.
Optional Coverages
1.
2.
B&PP form
a.
Agreed Value ... Not available on BOP
b.
Inflation Guard ... automatically on BOP
c.
Replacement Cost ... automatically on BOP for insured’s
property as long as limits are at least 80% to value,
however, BOP pays ACV for Property of Others
BOP ... (not available on B&PP form, but can be purchased on
Inland Marine, Crime and Equipment Breakdown forms)
a.
Outdoor signs
b.
Money & Securities
c.
Employee Dishonesty
d.
Mechanical Breakdown
Michael C. D'Orlando, CIC, LIA, CPIA
Page 17
BOP vs CPP
J.
General Liability
1.
Exception to Watercraft exclusion ...
B&PP form
This exclusion does not apply to:
(1) A watercraft while ashore on premises you
own or rent;
(2) A watercraft you do not own that is:
(a) Less than 26 feet long; and
(b) Not being used to carry persons or
property for a charge;
BOP
This exclusion does not apply to:
(1) A watercraft while ashore on premises you
own or rent;
(2) A watercraft you do not own that is:
(a) Less than 51 feet long; and
(b) Not being used to carry persons or
property for a charge;
Michael C. D'Orlando, CIC, LIA, CPIA
Page 18
BOP vs CPP
2.
Who is an Insured
•
Newly Acquired Organizations are automatically insured
on the CGL, but are not automatically covered on the
BOP ...
3. Any organization you newly acquire or form, other
than a partnership, joint venture or limited liability
company, and over which you maintain ownership
or majority interest, will qualify as a Named Insured
if there is no other similar insurance available to that
organization. However:
a. Coverage under this provision is afforded only
until the 90th day after you acquire or form the
organization or the end of the policy period,
whichever is earlier;
3.
Limits
•
Losses paid under “Damage to Premises Rented to You”
(aka Fire Legal Liability) do not reduce the aggregate
limit
Michael C. D'Orlando, CIC, LIA, CPIA
Page 19
BOP vs CPP