Business personal property (BPP) insurance is an important type of small business insurance for any business that owns equipment, inventory, office furniture, or tools. It is a type of commercial property insurance, meaning it is first-party coverage. It can be purchased from some carriers as a standalone policy and is often available as an endorsement you can buy with a general liability insurance policy. It is also included with the purchase of a business owner’s policy (BOP).
How Business Personal Property Insurance Coverage Works
BPP coverage is for tangible items. “Tangible” is an important distinction because BPP does not cover intangible assets like a trademark. Importantly, objects that do qualify for coverage with a BPP, such as other parts of a traditional commercial property policy, are tied to the listed location. Typically, a BPP policy will cover the items within a distance of 100 feet from the listed location.
A BPP policy covers items like:
- Computer equipment for your business
- Office furniture
- Office supplies
- Tools, equipment, and machinery located at your business
- Your personal property left at the business location
- Inventory stored at a business location, like a warehouse
- Valuable documents, including accounts receivable
Most insurers will want an estimate for the cost to replace your business property. So, it is important to ensure you’ve got an accurate inventory of your business property, supplies, and equipment when shopping for BPP insurance. For guidance, see our guide on how to organize inventory.
A BPP covers items in one of two ways: actual cash value (ACV) or replacement value:
- ACV: For this type of loss, the insurer will give you the funds to replace the lost item in the condition it was in at the time it was lost. So, if your claim is for a five-year-old laptop, you will be replacing it with either a used laptop or a new one that is similar in condition or quality to the original was when it was lost.
- Replacement value: This type of BPP policy is typically costlier than an ACV policy because the insurer gives you the funds you need to replace the lost item with something brand new.
How Much Does Business Property Insurance Cost?
It is difficult to give an exact answer for how much BPP insurance costs, simply because it is rarely offered as a standalone policy. Likewise, few insurance companies will complete a quote online solely for BPP insurance. Additionally, it is hard to estimate the cost of BPP insurance precisely because the business personal property limit changes for each small business.
That said, there are some insurers that do share estimates and average costs for the coverage. Surveying those published figures, the average monthly cost for a BPP is $42.
When calculating the cost of premium for this type of insurance, insurance companies will use the standard methods and data points they use for other coverages. However, the value of the property is also taken into account, along with whether it is being insured for ACV or replacement value.
For example, a photographer with $5,000 worth of equipment insured for ACV will pay less for BPP insurance than a production company with $60,000 worth of equipment insured for the replacement value.
Who Needs Business Personal Property Insurance?
Any small business owner with property should consider business personal property insurance. Let’s say you are renting an office building. Your general liability policy has coverage for damage to premises rented for you, so you do not need a commercial policy.
However, the property you are renting is about 2,000 square feet. Plus, you have couches, desks, chairs, computers, and a copy machine in one half of the space, and the rest is filled with inventory.
If the building burned down because you left a coffee machine on, then the general liability insurance policy would help cover the damage to the rented space. However, all the furniture, supplies, and inventory inside would represent a financial loss for your business. That’s why BPP coverage is an important type of insurance to look into.
BOP Insurance vs BPP Insurance
While a BPP and BOP sound similar, they are very different:
- A BPP is a single line of coverage for business personal property but not a physical structure
- A BOP is a combination (or bundle) of coverages; these include commercial property, including with business personal property and business lost income, and general liability insurance
Here’s a simple way of understanding the difference: a BOP typically covers everything a BPP does but it also covers the structure of the building and includes general liability insurance.
Frequently Asked Questions (FAQs)
Business personal property is classified as any type of tangible property your business owns that it can move. It can also include your personal property located on the business premises.
BPP is a type of commercial property insurance. The primary difference between the two is that BPP does not cover the actual physical structure of a business, while commercial property offers building coverage.
This depends almost entirely on the insurance company. Some insurers automatically include business lost income when you purchase a BPP, while others do not. However, if you purchase a BOP, lost business income should be included.
Bottom Line
If your business owns movable property, furniture, important files, or computer equipment, then you’ll want to ensure it is covered through business personal property insurance in case of a loss.
Simply Business is a small business insurance broker that can match you with the right provider. It can generate quotes online so you can compare prices. If you have questions, you can call and speak with a dedicated agent or purchase the policy entirely online.
