1. Forms
2. CP
3. CP-14-15

Form CP 14 15: Additional Building Property

1. What the form is

The Additional Building Property endorsement (CP 14 15) is a commercial property insurance form used to modify the definition of "Building" coverage. Its primary purpose is to explicitly include specific items as part of the building coverage that might otherwise be considered "Business Personal Property" or fall into a gray area, potentially leading to disputes at the time of a loss. By scheduling items on this endorsement, they are reclassified from "Business Personal Property" to "Building" property. This can be crucial for ensuring clarity and avoiding underinsurance or coinsurance penalties if the carrier and insured have different interpretations of what constitutes a building versus personal property.

2. Classes of business it applies to

This endorsement is valuable across various industries where the distinction between building and personal property can be ambiguous, or where specific, significant items might not clearly fall under the standard definition of "Building". Examples include:

• Manufacturing facilities: Large, heavy machinery and equipment that, while potentially movable, are integral to the building's function.
• Retail, especially supermarkets or businesses with specialized equipment: Items like large freezer cases, commercial ovens, or car wash equipment. For example, a car wash might have significant equipment that could be covered under Building using this endorsement, requiring an adjustment of the Building limit.
• Businesses with significant outdoor fixtures: Retaining walls, piers, wharves, or docks, if not already explicitly covered.
• Churches or institutions with specialized fixtures: Items like large pipe organs.
• Tenants responsible for certain building components: When a lease requires a tenant to insure items that are part of the building, such as tenant's improvements and betterments, this form can be used to classify them as "Building" under the tenant's policy. This can also help ensure that Ordinance or Law coverage applies to these items.

Essentially, any business that owns property which could be debated as either real (building) or personal property can benefit from the clarity provided by this endorsement.

3. Special considerations

• Clarity is Key: The main reason to use this form is to eliminate ambiguity. The standard Commercial Property Program (CPP) defines "permanently installed machinery and equipment" as part of the "Building," while "machinery and equipment" can also be listed under "Business Personal Property." The CP 14 15 helps define items that might be in this gray area, such as fixtures (including outdoor fixtures) or machinery that is attached but not necessarily "permanently installed" in the strictest sense.
• Impact on Limits and Coinsurance: When items are moved from Business Personal Property to Building coverage using this endorsement, it's crucial to adjust the respective coverage limits accordingly. Failure to increase the Building limit to account for the newly added property could result in a coinsurance penalty in the event of a loss. Conversely, the Business Personal Property limit should be decreased.
• Requirement for Existing Building Coverage: The insured must already have Building coverage in place to use this endorsement.
• Not for "Property Not Covered": This endorsement is distinct from the CP 14 10 Additional Covered Property endorsement. The CP 14 10 is used to add coverage for property types that are typically excluded under the standard policy (e.g., foundations, underground pipes). The CP 14 15, on the other hand, reclassifies property that is already covered (or presumed covered) as Business Personal Property to Building property.
• Permanently Installed vs. Attached: Manual rules may differentiate between items that are "permanently installed" and those that are merely "attached." The CP 14 15 can be used to cover items as "Building" even if they are only attached and not permanently installed, provided they are listed on the endorsement.

4. Key information for agents and underwriters

• Pricing/Rating: Generally, the insurance rate for "Building" coverage is lower than the rate for "Business Personal Property." Therefore, classifying appropriate items as "Building" via the CP 14 15 can sometimes result in a premium advantage for the insured, although the primary driver should be accurate classification and coverage.
• Risk Assessment: Underwriters need to carefully assess the items being added to the Building definition. The nature, value, and susceptibility to loss of these items should be considered. For example, adding high-value, specialized machinery will impact the overall building risk profile.
• Avoiding Coverage Gaps: This endorsement is a tool to proactively address potential coverage gaps that arise from misclassification of property. Agents should discuss with clients any significant items of property where the classification might be uncertain.
• Underwriting Guidelines: While the endorsement allows for owned business personal property items that are not permanently installed to be designated as building items, underwriters will still evaluate the appropriateness of such a designation based on the specific circumstances and the nature of the property. The property must be described in the schedule of the endorsement, including the building number and premises number.
• Relationship to CP 10 35 (Additional Property Not Covered): The CP 14 15 adds to the definition of Building. Conversely, the CP 14 20 (formerly CP 10 35, though the provided summary mentions CP 10 35 as related, current ISO forms typically use CP 14 20 for "Additional Property Not Covered") is used to exclude specific items of building or personal property from coverage. It's important not to confuse their functions.
• Tenant's Improvements and Betterments (TIBs): For tenants who have invested significantly in TIBs and are required by their lease to insure them, the CP 14 15 can be a crucial endorsement to ensure these are covered as "Building." This can be particularly important for ensuring Ordinance or Law coverage (via CP 04 05) applies to the TIBs, as that coverage typically responds to "Building" property.