Business Personal Property of Others: Insuring It Properly Involves Many Considerations

ADJUSTERSINTERNATIONAL.COM

...and Personal Property Coverage Form (BPP) are (1) leased personal property and (2) other personal property in the named insured’s care, custody or control. Since both of these types of personal property coverages are treated differently by the BPP Coverage Form, they likewise will be discussed separately.

Exhibit 1 consists of a comparison of coverage between personal property of others under lease, versus such property that is not leased — or is leased but not subject to any contract prescribing the need for certain insurance.

Leased Personal Property

To qualify for coverage on leased property — such as computers, telephone systems, and photocopiers — there needs to be a contract requiring the bailee to maintain some kind of insurance on the leased property. This means that if there is no contractual responsibility to insure the property while in the temporary possession of the bailee, the property is subject to coverage under the Personal Property of Others section of the BPP coverage form.

Assuming, for a moment, that the business personal property is leased and is subject to a written contract prescribing certain insurance, the BPP coverage form automatically includes coverage as part of the named insured’s business personal property coverage. While no separate limit for this leased personal property of others applies, it is necessary that the addition of the values for this property...

EXHIBIT 1

Leased Versus Non-Leased Personal Property of Others Coverage

Your Business Personal Property

Personal Property of Others

Leased personal property (A)

No separate limit is necessary (C)

Located in or on the building or structure described in the Declarations or in the open (or in a vehicle) within 100 feet of the premises described in the Declarations, whichever distance is greater.

Off-premises coverage subject to a $10,000 limit (E)

Actual cash value or replacement cost (F)

Non-leased property (B)

Separate limit must be shown (D)

Same

Same

Actual cash value (G)

Notes

(A) Coverage is contingent on the named insured having a contractual responsibility to insure the leased property; otherwise, the leased property is to be covered under the Personal Property of Others section of the BPP Coverage Form. If leased property and less than the other six kinds of personal property exposures are to be covered under the Your Business Personal Property section, the property can be itemized and covered under Your Business Personal Property – Separation of Coverage Endorsement CP 19 10 or under the Leased Property Endorsement CP 14 60.

(B) The non-leased property has to be in the named insured’s care, custody or control. This category also includes leased personal property of others, if there is no contract requiring insurance on that property.

(C) Although no separate limit needs to be shown for leased personal property, the valuation needs to be added so that the named insured does not become a co-insured under the applicable co-insurance clause.

(D) A separate limit must be shown on the policy Declarations, along with the appropriate causes of loss form and co-insurance limit. If none is declared, the only coverage that might be available is the automatic maximum limit of $2,500, but it does not apply to theft loss. (E) The territorial limit is the U.S., its territories, possessions, Puerto Rico and Canada.

(F) If a written contract governs the valuation of personal property, the valuation is based on the amount specified in the contract but not to exceed the lesser of the replacement cost or the applicable limit of insurance.

(G) Non-leased personal property is covered on an actual cash value basis. The BPP Coverage Form, however, offers a Replacement Cost extension… .


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