Every small business relies upon its hardware and equipment. From a graphic designer that uses their computer to forklifts and packaging machines inside a manufacturer, we need our tools to get the job done. When these tools break, our ability to work is hindered, often causing us financial loss.
That’s where commercial property insurance comes in; it’s a type of policy that most businesses take out to insure the bulk of their equipment. But commercial property insurance is a broad umbrella, with fine print that varies from policy to policy. To make sure their equipment is fully covered, companies are focusing on the BPP extension of a commercial property.
Business personal property (BPP) insurance covers the personal property owned by the Named Insured on the policy. Why does this matter? And how is business personal property coverage different than commercial property insurance? Below, we’ll explain all that and more.
BPP insurance explained
Business personal property covers what the insurance world calls “business contents,” or moveable things that are owned by a business. BPP targets specific items, often incorporated as an extension of a commercial property policy.
If commercial property insurance is the broad umbrella that covers most business equipment, BPP insurance ensures that all the little missed areas are accounted for. BPP is a coverage that is often neglected or merely given a value in a single lump-sum.
But what exactly does it cover?
Business personal property, or “business contents”: What’s covered?
It’s important to note that BPP policies don’t come as one-size-fits-all. They vary from insurer to insurer, policy to policy.
Typically, a BPP policy includes (but is not limited to):
- Office furniture – Chairs, desks, ergonomic furniture, printer stands
- Office supplies – Staplers, 3-hole punchers, label makers, calculators, etc.
- Furnishing – Rugs, drapes, curtains, etc.
- Electronic hardware – Computers (both desktops and laptops), tablets, monitors, smartphones, digital sketch pads, etc.
- Heavy equipment – Packaging machinery, forklifts, etc.
- Machinery – 3D printers, industry-specific machines
- Betterments – Fixtures, additional work, or any alterations and installations made to the business’s building or office can be included
Being that a BPP policy is tailored to the owner of the equipment, the list can go on and on. Typically, BPP encompasses what the policyholder wants to insure and whether or not the insurer is willing to include it in the policy.
As we’ve already mentioned, BPP policies differ in how they’re structured and what they protect against. Typically, they provide coverage against:
- Perils: fire, natural disasters, “acts of God”
- Damages (including loss)
How are these items valued?
The real answer: it depends on the insurer. However, it’s recommended that you always value your business’s contents by its current value in the market, as this estimate will ensure that you’re adequately compensated in the case of damages to your assets.
But remember: the higher the value, the higher your premium is likely going to be. In which case, by using the current market value, you’re insuring your equipment at “top dollar.”
Cash value vs. replacement value
When you’re deciding on a business personal property policy, your insurer will typically provide two insurance options:
Cash value – A cash value policy BPP policy will reimburse the equipment by its current price in the market. It’s important that you understand this also accounts for depreciation. If you purchased the business equipment or material and years have passed, you will be reimbursed for what it’s currently worth.
Replacement value – A replacement value BPP policy is what it costs to buy a brand-new replacement for a specific item. Usually, a replacement value policy is going to cost more than a cash value one. The policyholder might also have to try and repair their item before receiving a replacement.
Understanding direct and indirect loss
Insurers typically clump loss in two different categories:
Direct loss – If your items are lost due to fires, storms, collision, theft, or “acts of God,” they’re considered a direct loss.
Indirect loss – If you’re now running into problems due to the fact that your items have been damaged or experienced wear, causing you financial loss, this is an indirect loss.
For most BPP policies, it needs to be a direct physical loss for coverage to go in effect. Say, for instance, that your computer breaks in the middle of a delivery. Now, you can’t access the files on the hard drive and you can’t ship your work by the deadline.
While a business personal property policy will likely replace the computer or reimburse the cash value, they won’t cover the financial loss due to a work stoppage.
It’s paramount to note that, if your business contents are not being used for business, it’s likely that they will no longer be covered. Consider the following situation:
You’re someone that has a BPP extension in your commercial property insurance policy, yet you switch professions years down the line. Some of your equipment you don’t use anymore. Should this equipment incur damages or loss, then your policy—depending on the language—might no longer cover your business contents.
Note: As with any policy, make sure you know the ins and outs of what you’re signing up for. Given the specificity of a BPP policy, it’s important to review every coverage.
Business personal property insurance is usually an extension of another policy. It helps protect your business contents against loss, damage, and theft. But no matter the type of insurance, if you’re in the market for a policy, it’s important that you understand the ins and outs of what’s covered.
Affordable insurance for small businesses
While a BPP policy protects your business contents, are you protected if you damage a third party’s property while providing your services? Thimble makes general liability insurance and professional liability insurance simple for small businesses.
Our general liability policies help protect you from third-party claims of:
- Bodily injury
- Property damage
- Personal and advertising injury
Should a client claim that you were negligent in your services and, due to your actions, they experienced financial loss, then our professional liability insurance protects against errors and omissions.
Why Thimble? Because it’s insurance that works when you do. From hourly, daily, and monthly policies, we’re able to make policies so affordable by tailoring them to you. Download the Thimble app or click “Get a Quote,” input a few details, review your quote, purchase, and you can go from zero coverage against liability to being protected against any unexpected mishaps.
You know how important it is to protect your business—we know how important it is that you understand your insurance.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.