Businesses have different "levels" of property. The facility where operations take place is one level. Manufacturing machines that create products is another. Then there is the matter of business personal property (BPP).
Within the insurance industry, BPP is defined as movable items that are owned by a company. In other words, this would not involve production machines bolted to the plant floor. Rather, it’s everything else within and outside the business that can be transported.
Examples of BPP include:
Smaller productions machines
Computers, smart devices, and network equipment
Furnishings (e.g. carpets or blinds)
Heavy equipment (e.g. forklifts)
The cost of these items can be in the tens or hundreds of thousands of dollars. Thus, if they were damaged or destroyed due to catastrophic loss, a company would have a hard time replacing them on their own. Thus, like the company itself, BPP needs to be protected via an insurance policy.
General liability insurance won’t cover these items; the most basic of these policies cover damage to property and bodily injury. Instead, a company needs to purchase a commercial property insurance policy to protect BPP.
Normally, a business would only include tangible property in a policy. These are items that someone can physically touch. It wouldn’t cover intangible items like stocks, bonds, patents, or intellectual property. Those would be covered in a separate policy or a rider.
The cost of a commercial property insurance contract for BPP depends on two factors. First, how many items need to be insured. Second, their current values. Here, the insurer works with the company to determine how reimbursement will be made.
One way is via actual cash value. This is the current market price of the BPP. The other is the replacement value. That is the full cost of the product no matter the most recent market indicators. A policy with replacement values for BPP costs more because the values are higher.
Before purchasing commercial property insurance, the company must conduct an inventory of its BPP. This gives the insurer a physical copy that they can refer to when creating the policy. The policyholder also needs to update the contract when there are any additions, changes, or deletions to their BPP.