Filed Under:Claims, Education & Training

It's business, it's not personal (property)

Coverage Q&A

Montana politician Greg Gianforte poses with animal trophies at his Bozeman home in October 2016. When similar hunting trophies are displayed at a business, they may not be covered in the event of a loss. (AP Photo/Matt Volz, File)
Montana politician Greg Gianforte poses with animal trophies at his Bozeman home in October 2016. When similar hunting trophies are displayed at a business, they may not be covered in the event of a loss. (AP Photo/Matt Volz, File)

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Question: The insured has a commerical policy — CP 00 01 (07/02) — with no deductible. This policyholder owns a few buildings and one of the buildings is used to store some of his business personal property (BPP) valued at $200,000. He has the property insured for $200,000. So it is insured adequately.

Later, he buys addition BPP (newly acquired property) worth $110,000. He places this additional BPP in the same storage building. Ten days go by after the purchase and he still has not called his carrier to add this newly acquired property.

Then, a fire consumes the building, and all the business property is destroyed. How much should the carrier pay the insured for the BPP? 

— North Carolina Subscriber

Answer: Since ISO does not have a 07 02 edition of CP 00 01, this response is based off of the 04 02 edition of CP 00 01.

The limit of insurance for the BPP is $200,000, then that is the amount of coverage that is available for the loss to BPP.  

Although the extension for Your BPP (2)(a) would provide for newly acquired BPP, the amount available under this extension is subject to the actual BPP limit of insurance. The coverage extension is not an additional limit of coverage; rather it is an extension of the coverage provided under the BPP limit.  

When business property belongs to someone else

Question: We insure a flooring company that will store flooring in their warehouse that belongs to a customer. What is the best option to insure the property of others: merely allow the property value to be included in the BPP limit as the definition of BPP includes property of others, or specify a limit for personal property of others?

— California Subscriber

Answer: The ISO CP 00 10 Building and Personal Property Coverage form contains a coverage extension for personal property of others that is in the insured’s care, custody, or control. The extension carries a limit of $2,500. If the insured needs more coverage, the property should be covered under the personal property of others coverage, which is designed to cover such property. The business personal property coverage part applies to the insured’s property.

Product samples vs. business personal property

Question: The insured is a business that installs windows and doors, which includes a shop and a showroom. The displays that are in the showroom were damaged from the fire.

The insured used the displays for trade shows he goes to throughout the year. The insured's commercial property policy contains an additional $10,000 coverage for salesperson samples. He is going to max out his business personal property limit with just tools and office equipment. These displays are actually window and door displays that are built in a custom display to show off the different window layouts and manufactures. There are probably fifteen or so displays, and most are eight feet wide by six feet tall. These sit in the showroom roughly fifty weeks out of the year and get taken to tradeshows when needed.

Since they were setup in the showroom during the fire, would these displays be considered salesperson samples or business personal property?

— Illinois Subscriber

Answer: The endorsement for salespersons samples states that coverage does not apply to property located in or on the building described in the declarations. Since they were set up in the showroom at the time of the fire (presumably in the building described in the declarations), they would not be covered by this endorsement. They could still be considered business personal property under the commercial property policy (unless wording in the policy otherwise excludes it).

Addressing lost furniture or fixtures

Question: Our insured, a flea market, experienced a fire loss. Each vendor booth at the flea market was equipped with a large table that was leased with the booth. The tables were not permanently attached by bolts or anything else but were by no means intended to be moved due to their large size and weight. Because they were intended to remain in their respective booths, could the tables be considered to be real property (part of the building) or are they personal property?

— North Carolina Subscriber

Answer: The tables would be considered furniture and thus personal property. Even if they are not intended to be moved, if they still can be moved without damaging real property, then they are business personal property.

Mounted hunting trophies at work

Question: I have a client who has several mounted trophy animals in his office. They are trophies from elk hunts in Colorado. They have been displayed in his office for a number of years. He is insured on an ISO Businessowners policy.

The question has come up as to whether the mounts are considered business personal property or personal property to be covered under the insured's homeowners policy?

— Pennsylvania Subscriber

Answer: The mounted elk trophies would not qualify as business personal property as defined in the ISO BOP. The policy requires that business personal property be used in the insured's business, which is not the case with the elk trophies. The ISO form does provide up to $2,500 for personal effects, which should cover the trophies.

See also:

3 ways to ease the business interruption claims process

5 key facts about small business auto insurance coverage

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