What is business personal property (BPP)?
Business personal property is everything your business owns that would fall out if you turned the building upside down: equipment, furniture, computers, stock and supplies. It is insured on your property policy separately from the building itself, with its own limit. Set that limit from a written list at what it would cost to replace everything new, because insuring too little can cut what you are paid on even a small claim.
- BPP is your contents, not the building. A build-out you paid for as a tenant is usually yours to insure.
- Choose replacement cost, not depreciated value, and set the limit from a written list, including your busiest season.
- Tools and equipment that leave the premises belong on a separate equipment policy.
What counts as my property, and what counts as the building?
The building is the structure and what is permanently part of it. Your business property is what you own and use inside it. Insurers call that second group business personal propertyBusiness Personal Property (BPP) The things inside your business you would have to replace after a loss, such as furniture, equipment, inventory, and supplies. Insurers call this business personal property. more →, or BPP.
The grey area is a tenant's build-out: walls, flooring, lighting or counters you paid to install in a space you rent and cannot take with you. Policies differ on whether that work counts as building or contents. (Source: IRMI) If you paid for it, assume it is yours to insure until your lease and your policy say otherwise.
In an analysis of more than one million small-business policies, fire was the costliest type of claim, averaging $80,000 per claim in 2025. (Source: The Hartford, via Carrier Management)
How much will I be paid if my property is destroyed?
That depends on which of two payout methods your policy uses. One pays what it costs to buy the item new today; the other pays what the old item was worth after wear and age.
The first method is called replacement costReplacement Cost Value (RCV) What it costs to repair or replace damaged property with a new equivalent, without subtracting for age or wear. Insurers call this replacement cost value.: the policy pays to repair or replace the property with materials of like kind and quality. The second is actual cash valueActual Cash Value (ACV) What your damaged or stolen property was worth the day you lost it, after subtracting wear and age. Insurers call this payout method actual cash value.: the payout takes the item's age and wear into account. (Source: NAIC)
As an illustration, take a seven-year-old walk-in cooler that would cost $18,000 to replace. Assume age and wear have cut its value to 40% of new, and the deductible is $1,000.
| What happens | Replacement-cost policy | Actual-cash-value policy |
|---|---|---|
| A new walk-in cooler would cost | $18,000 | $18,000 |
| The policy values the cooler at | $18,000 (the new price) | $7,200 (40% of new after age and wear: $18,000 × 40%) |
| Less the $1,000 deductible, the insurer pays | $17,000 ($18,000 − $1,000) | $6,200 ($7,200 − $1,000) |
| You pay toward the new cooler | $1,000 ($18,000 − $17,000) | $11,800 ($18,000 − $6,200) |
Illustration only, with round numbers. It is not a statement of what any policy pays; your own policy wording governs.
Check which method your quote uses when you compare insurance quotes, because two prices for the same limit can describe very different payouts.
What if I carry much more stock at certain times of year?
Set the limit for your peak, or ask for an add-on that raises it during the months you stock up. A fire in your busiest month is the one your limit has to survive.
One insurer's guidance uses a holiday-décor retailer as the example: stock runs well above normal from October through December, and an add-on can raise the limit for just those dates. Some property forms also raise the contents limit by 25% automatically for seasonal swings, provided the average monthly value over the past 12 months stays within the limit on the policy. (Source: Central Insurance)
Do not count on an automatic increase you have not read. Ask your agent whether yours has one and what conditions apply.
Is my equipment covered when it leaves the building?
Often not, or only for a small amount. BPP is written for property at your listed location; tools, equipment and goods that travel belong on a separate policy that follows them.
That separate coverage is called inland marineInland Marine Coverage for business property that moves or sits away from your premises, such as tools, equipment, or goods in transit. Insurers call it inland marine.. Its most common form for owners is an equipment floater: property insurance for equipment that is often moved from place to place. (Source: IRMI) Catering gear, a contractor's truck-mounted tools and a laptop kit that goes to customer sites all fit here.
List each item that travels, with its replacement value, and ask for equipment and goods-in-transit coverage for it. The insurer can only cover property it was told about, as explained in why insurance covers the whole business.
How do I set the right amount, and what happens if I set it too low?
Build a written list of everything you own, room by room, at today's replacement price, and add it up. If you insure for less than a set share of that total, the policy cuts every claim in proportion, not just the total-loss ones.
That rule is called coinsuranceCoinsurance A property-policy rule that requires you to insure for a set share of your property's value, or the insurer cuts your payout. Insurers call this coinsurance.. Most property policies require you to insure a set share of the property's value, commonly 80%; if your limit falls short, the claim is paid in the ratio of what you bought to what you should have bought, minus the deductible. (Source: IRMI)
As an illustration, say your contents would cost $500,000 to replace, you carry $300,000, and a kitchen fire causes a $100,000 loss with a $1,000 deductible.
| What happens | Amount | Insurer pays | You pay |
|---|---|---|---|
| Your contents would cost this much to rebuild or replace | $500,000 | ||
| The rule says you must insure them for at least 80% of that ($500,000 × 80%) | $400,000 | ||
| You actually insure them for | $300,000 | ||
| So the insurer pays this share of any loss (what you insure them for ÷ what the rule requires: $300,000 ÷ $400,000) | 75% | ||
| Your deductible is | $1,000 | ||
| A kitchen fire causes a loss; the insurer pays its share less the deductible (75% × $100,000 − $1,000), and you pay the rest | $100,000 | $74,000 | $26,000 |
Illustration only, with round numbers. It is not a statement of what any policy pays; your own policy wording governs.
A policy with this rule can pay a partial loss in proportion, so part of the loss can fall on you even when it is under your limit. Check your policy wording and ask your agent.
Update the list every year and whenever you buy major equipment. Your commercial property policy is only as good as the number on it.
Frequently asked questions about business personal property
Leased equipment you are responsible for can usually be included, and many policies give a small amount for customers' property in your care. If you regularly hold other people's goods, ask for that coverage by name with its own limit.
No. BPP pays to repair or replace your things. The income you lose while you are closed is a separate coverage, usually added to the same property policy.
Receipts help, but a dated list with photos or a video walk-through of each room can help support a claim. Keep a copy somewhere other than the premises.
Is your contents limit set from a list, or a guess?
Send us your current property policy and equipment list. We will check the limit, the valuation method and what travels off-site.