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


Unlike leased personal property of others, the coverage for non-leased personal property of others applies on an actual cash value basis, even though the named insured’s personal property may be covered on a replacement cost basis. sufficient so as not to be in violation of any co-insurance clause.

Depending on the type and value of the leased personal property, the lease agreement may require that the insurance maintained be of a certain amount. When this occurs, it might be advisable to request the issuance of the Leased Property Endorsement CP 14 60. It is here that the personal property is described, including the premises and building number where the property is located, and the agreed value. This endorsement states that if an agreed value is inserted for the scheduled property, this amount is considered to be the value of the described property at the time of loss or damage. However, such amount is still subject to any applicable co-insurance provision. Also, this described property is not included under any Personal Property of Others coverage in this coverage part.

If the replacement cost option is shown as being applicable in the policy Declarations, the replacement cost also applies to leased business personal property of others. However, if a written lease agreement prescribes the extent of responsibility to the property, the valuation is based on the amount so stipulated, but not to exceed the replacement cost or the applicable limit of insurance.

Leased personal property, subject to a lease agreement, falls into the category of the named insured’s business personal property, which consists of seven kinds of property:

If a limit is inserted in the Declarations for the named insured’s business personal property and not all of the foregoing categories of property need to be covered, the categories of personal property to be covered can be itemized on the Your Business Personal Property – Separation of Coverage Form CP 19 10.

In light of the fact that the subject of coverage for leased personal property is property insurance, coverage applies whether or not the named insured is legally liable for any loss or damage. (One of the ways, discussed later, in which the cost of insurance can be reduced is to cover the leased personal property under the Legal Liability Coverage Form.)

It is important to note, however, that to the extent coverage for leased personal property is covered by the BPP Coverage Form, payment of any loss to the property’s owner is made directly by the insurer to the owner of the leased property, or to the one who holds legal title to it.

Non-Leased Personal Property of Others When personal property of others in the care, custody or control of the named insured is not...