Businessowners Policy (BOP) - Property Provisions

Fast Facts

• Section I (Property) covers direct losses to buildings, business personal property, and personal property of others.
• Building coverage: Real property, permanent fixtures, building materials within 1,000 feet.
• Business personal property coverage: Property in premises, in the open, or in a vehicle within 1,000 feet.
• Valuation: Replacement cost basis (requires 80% coinsurance).
• Indirect losses: Covers loss of business income and extra expenses.
• Open perils coverage: Covers all causes of loss except those excluded (e.g., utility services failure, power surges, computer/data losses, fungus, collapse, product errors).
• Additional coverages: Debris removal, pollutant cleanup (subject to limits).

Property Coverage Details

Building Coverage

Covers buildings/structures listed in declarations, including:

• Completed additions, indoor/outdoor fixtures, permanently installed machinery/equipment.
• Business-owned personal property for building maintenance.
• Construction materials, equipment, temporary structures within 1,000 feet (if not covered elsewhere).
• Landlord-furnished personal property in rented apartments/rooms/common areas.

Business Personal Property Coverage

Covers property in insured premises, in the open, or in a vehicle within 1,000 feet, including:

• Business-owned property, stock, leased property, tenant’s improvements, exterior building glass.
• Personal property of others in insured’s care, custody, or control.

Property Not Covered

• Money, securities, illegal goods, aircraft, vehicles, watercraft (while afloat).
• Permanently installed computers in vehicles/aircraft/watercraft (unless held as stock).
• Land, water, crops, lawns, outdoor fences, detached signs, trees, shrubs, plants (unless extended).
• Valuable papers, accounts receivable, electronic data (unless extended).
• Ransomware losses, animals (except boarded or held as stock and killed/destroyed).

Covered Causes of Loss

Open perils coverage: Covers all causes except those excluded. Can be modified to named perils via endorsement (BP 10 09).

Specified causes of loss: Fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot/civil commotion, vandalism, sprinkler leakage, sinkhole collapse, volcanic action, falling objects, weight of snow/ice/sleet, water damage.

Key Exclusions

Exclusion	Details
Utility Services	No coverage for losses from off-premises utility failure (e.g., water, power, internet).
Power Surges	No coverage for surges, but fire caused by a surge is covered. Computer damage from surges within 1,000 feet is covered.
Computers/Data	No coverage for certain computers/data losses unless caused by specified perils (e.g., fire, vandalism).
Fungus/Rot/Bacteria	Covered if caused by water from extinguishing a fire; otherwise, requires additional coverage.
Collapse	No coverage unless caused by specified perils (e.g., fire, glass breakage, weight of rain).
Product Errors	No coverage for losses from defective products (business risk, not insured peril).

Additional Coverages

• Debris Removal: Covers 25% of direct loss + deductible; additional $25,000 if limits exhausted.
• Pollutant Cleanup: Up to $10,000 for pollutant removal from land/water if caused by covered peril.
• Fire Department Charges: Up to $2,500 (or higher if specified).
• Preservation of Property: Covers property moved to avoid loss for up to 30 days.
• Counterfeit Money: Up to $1,000 for losses from counterfeit money/orders.
• Forgery/Alteration: Up to $2,500 for check/draft forgery.
• Increased Cost of Construction: Up to $10,000 for ordinance compliance.
• Fire Extinguishing Systems: Up to $5,000 for recharge/replacement.
• Glass Expenses: Covers temporary boarding/repairs (no limit).
• Electronic Data: Up to $10,000 for data restoration from covered causes.
• Fungi/Bacteria: Up to $15,000 for losses from specified causes (not fire/lightning).
• Collapse: Covers collapse from specified perils (e.g., fire).

Coverage Extensions

• Newly Acquired Property: Up to $250,000/building, $100,000/personal property (expires after 30 days or policy end).
• Property in Transit/Off Premises: Up to $10,000 for property away from premises.
• Outdoor Property: Up to $2,500 for trees, shrubs, fences, detached signs (limited perils).
• Personal Effects: Up to $2,500 for personal effects (no theft coverage).
• Valuable Papers/Records: Up to $10,000 at premises, $5,000 elsewhere.
• Accounts Receivable: Up to $10,000 at premises, $5,000 elsewhere.

Business Income & Extra Expense

• Business Income: Covers income loss from business slowdown/stoppage (up to 12 months, no dollar limit, 72-hour deductible).
• Extra Expense: Covers expenses to minimize suspension (up to 12 months, no limit).
• Dependent Properties: Up to $5,000 for income loss from damage to dependent businesses.
• Order of Civil Authority: Covers income loss/extra expenses from restricted access (72-hour deductible for income).
• Interruption of Computer Operations: Up to $10,000 for losses from specified causes/computer virus.

Limits & Deductibles

• Limits: Declared for buildings/personal property; $1,000 sublimit for outdoor signs.
• Inflation Guard: Increases building coverage daily (e.g., 8% annual increase).
• Peak Season: Increases personal property limit by 25% for seasonal inventory.
• Deductibles: $500/occurrence (optional $250, $1,000, $2,500); none for business income, extra expense, fire dept., civil authority, extinguisher recharge.

Optional Coverages

• Outdoor signs, mechanical breakdown, employee dishonesty, money and securities (if listed in declarations).

Valuation & Coinsurance

Replacement cost requires 80% coinsurance. If underinsured, pays actual cash value or proportional replacement cost. Property of others under contract valued per contract terms.

Key Conditions

• Vacancy: Coverage voided for vandalism, theft, etc., after 60 days vacancy; 15% reduction for other losses.
• Party Walls: Insurer pays for repairs, may subrogate against other owner.
• General Conditions: Control of property, mortgage holders, no benefit to bailee, policy period/territory.