Under which provision of the Building and Personal Property Coverage Form (BPP) is the maximum payment $10,000 or five percent of the building limit, whichever is less?

Under which provision of the Building and Personal Property Coverage Form (BPP) is the maximum payment $10,000 or five percent of the building limit, whichever is less?

• A. Additional Coverage for Windstorm damage
• B. Increased Cost of Construction
• C. Special Personal Property Coverage
• D. Limits of Liability for Property Damage

Answer: (B)

The correct answer relates to the Increased Cost of Construction coverage, which falls under the provisions of the Building and Personal Property Coverage Form (BPP). This provision is designed to cover additional expenses that may arise in the aftermath of a loss, specifically related to upgrading or improving a building to comply with current building codes and regulations. In the context of the question, the maximum payment for this coverage is indeed capped at $10,000 or five percent of the building limit, whichever is less. This limitation exists to manage the insurer's exposure while still providing policyholders with some financial assistance for costs that could be incurred when rebuilding or repairing damaged property according to new regulations. This provision helps balance the need for coverage against the financial risks for the insurance company. Other options, while they may relate to different coverages or provisions within the BPP, do not impose the same specific financial limits or refer to the costs associated with increased construction expenses after a loss, which is why they are not the correct answer for this question.

The correct answer relates to the Increased Cost of Construction coverage, which falls under the provisions of the Building and Personal Property Coverage Form (BPP). This provision is designed to cover additional expenses that may arise in the aftermath of a loss, specifically related to upgrading or improving a building to comply with current building codes and regulations.

In the context of the question, the maximum payment for this coverage is indeed capped at $10,000 or five percent of the building limit, whichever is less. This limitation exists to manage the insurer's exposure while still providing policyholders with some financial assistance for costs that could be incurred when rebuilding or repairing damaged property according to new regulations. This provision helps balance the need for coverage against the financial risks for the insurance company.

Other options, while they may relate to different coverages or provisions within the BPP, do not impose the same specific financial limits or refer to the costs associated with increased construction expenses after a loss, which is why they are not the correct answer for this question.