BPP Insurance: What It Is, Who Needs It

Business personal property insurance, or BPP insurance, can pay out to help you repair or replace items your business owns, including machinery, furniture and inventory. This coverage is part of business property insurance policies.

Most businesses need property insurance as part of their small-business insurance coverage. But if you carry inventory, use specialized equipment or have invested in furnishing your space, make sure your property insurance policy includes BPP insurance with a large enough limit to cover all those items.

What does BPP insurance cover?

BPP insurance covers repairing or replacing business personal property when damaged by a covered cause of loss.

Business personal property can include:

• Inventory.

• Furniture.

• Machinery and equipment.

• Improvements you’ve made to a leased space as a tenant.

• The property you’ve leased from another party that you’re required to insure.

Your business personal property may or may not be insured, depending on what caused it to be damaged or destroyed. All business property insurance policies — which also protect business personal property — provide coverage in case of:

• Fire.

• Lightning.

• Explosion.

• Windstorm or hail.

• Smoke.

• Aircraft or vehicles.

• Vandalism.

• Riot or civil commotion.

• Sprinkler leakage.

• Sinkhole collapse.

• Volcanic activity.

• Fungus, wet rot, dry rot and bacteria, with some limitations.

Some, but not all, business property insurance policies cover losses due to:

• Falling objects.

• The weight of snow, ice or sleet.

• Water damage.

• Collapse.

Some causes of loss, like floods and earthquakes, are usually excluded from business property insurance policies. Read your policy closely to make sure you understand what’s covered and what’s excluded.

How do you get BPP insurance?

To get BPP insurance, you’ll need to purchase business property insurance and make sure there’s an entry for business personal property on the policy.

It might feel counterintuitive to buy business property insurance if you don’t own a building. But business property insurance can include coverage for three different types of property, including buildings themselves as well as the things inside:

• Business personal property.

• Buildings and structures.

• Personal property of others that the business is temporarily holding.

You can buy business property insurance on its own or as part of a business owner’s policy. A BOP combines business property insurance with general liability insurance, which can protect your business against lawsuits if someone is injured or their belongings are damaged by your operations.

In general, if you need BPP insurance, you should consider purchasing a BOP. It’ll provide the property insurance you need and help protect you if a customer or another third party accuses your business of causing them harm, which is one of the most common risks business owners face.

How much BPP coverage do you need?

For business property insurance policies, you typically need a policy limit of at least 80% or 90% of the value of the covered property. This is spelled out in what’s called the “coinsurance provision,” which you can find in your policy declarations.

If you choose an insurance limit lower than the percentage specified by the coinsurance provision, your insurance company may not fully cover your loss.

For instance, say your inventory would cost $30,000 to replace and you set your BPP insurance limit at $15,000:

If your inventory was destroyed, your insurance policy would only pay out your limit — $15,000 — and you’d have to pay out of pocket to recover the rest.

If your inventory was only partially destroyed, the insurance company might limit your recovery amount based on how well you complied with the coinsurance provision. For instance, say your coinsurance provision required a limit of 80% of the value of your property, or $24,000. If you only had a $15,000 limit, the insurance company could limit your recovery to 62.5% of the lost value since you complied with only 62.5% of the coinsurance provision.

How much does BPP insurance cost?

Commercial property insurance, which includes BPP insurance, costs $63 per month for the median customer, according to insurance marketplace Insureon.

That said, the cost of BPP insurance depends on how much property you’re insuring. In general, the higher your coverage limit, the more expensive your BPP insurance will be.

Get business property insurance quotes from several insurance providers to determine how much BPP insurance will cost for your business.

If you need coverage quickly:

• Next allows users to get a quote and purchase a policy online. Users can also download an electronic certificate of insurance and receive a claims advocate they can call or text in the event of a claim. Read NerdWallet's review of Next Insurance.

• Thimble is another online insurance seller that offers fast coverage, though its customer support is more limited than Next's. Note that Thimble calls BPP insurance "business contents insurance." Read NerdWallet's review of Thimble.

If you need several coverage types:

• Allstate offers various coverage types, many of which can be tacked onto a business owner’s policy. The company topped J.D. Power’s commercial insurance customer satisfaction survey in 2021. Read NerdWallet's review of Allstate business insurance.

• Chubb users can buy a business owner's policy online, and many other policies are available through agents. According to the Insurance Information Institute, Chubb had the largest share of the commercial insurance market in 2020. Read NerdWallet's review of Chubb business insurance.

If you want hands-on help:

• State Farm sells coverage packages for various industries, which local agents sell throughout the country. Read NerdWallet's review of State Farm business insurance.

• Look for an insurance broker or independent insurance agent near you. Brokers and independent agents sell policies from various insurance companies and can help you find a good fit.