Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceMedium
A business operates out of a leased commercial space in a strip mall. The lease agreement requires the tenant to be responsible for any improvements they make to the interior of their unit, such as custom flooring, shelving, and built-in counters. Which part of the Commercial Property Building and Personal Property (BPP) coverage form would cover these tenant-installed improvements?
- ACoverage C - Personal Property of Others
- BCoverage A - Building
- CCoverage D - Business Income
- DCoverage B - Business Personal Property
Show answer & explanationAnswer & explanation
Correct answer: D. Coverage B - Business Personal Property
Under the BPP form, 'Business Personal Property' includes the tenant's interest in 'Improvements and Betterments' made to a leased building. These are fixtures, alterations, installations, or additions made by a tenant that become a part of the building but cannot be legally removed by the tenant.
Why the other options are wrong
- A. Personal Property of Others covers property belonging to others that is in the insured's care, custody, or control, not the insured's own improvements.
- B. Coverage A (Building) typically covers the structure itself, often owned by the landlord, not tenant improvements.
- C. Business Income covers lost revenue, not physical property.
Improvements and Betterments (BPP)
Fixtures, alterations, installations, or additions made by a tenant to a leased building that become part of the building and are covered as Business Personal Property under a Commercial Property Policy.
- Covered under Business Personal Property (Coverage B) of the BPP form.
- Must be made or acquired by the tenant.
- Cannot be legally removed by the tenant at the end of the lease.
Memory trick: Tenant's touch, business property much, not the building, but their claim's clutch.