Covered causes of loss: the outline lists basic, broad and special loss forms for BOPs. Basic and broad pay only for the perils they name, and broad simply names more of them. The special form covers direct physical loss unless the policy excludes or limits it. The current ISO BOP form is written on this open basis, and a Named Perils endorsement can narrow it.

Valuation: replacement cost is the standard BOP valuation, and actual cash value is optional. Example: wind destroys a 15-year-old roof that costs $30,000 to replace and had an actual cash value of $18,000. If the building is insured to value and the ACV option was not chosen, the policy pays $30,000 once the roof is replaced.

Usually no coinsurance, but an insurance-to-value provision: ISO's BOP asks the insured to carry at least 80% of replacement cost. If the limit falls short, the insurer pays the greater of actual cash value or (limit ÷ 80% of replacement cost) × the cost to repair.

Example: replacement cost is $500,000, so 80% is $400,000. The limit is $300,000. A partial loss costs $40,000 to repair, and its actual cash value is $26,000. $300,000 ÷ $400,000 × $40,000 = $30,000, which is more than $26,000, so the insurer pays $30,000 (ignoring the deductible). Dividing by the full $500,000, which gives $24,000, is the classic mistake.

Some insurers agree to waive insurance-to-value by endorsement (ISO's Removal of Insurance-to-Value Provision). Then a limit below 80% no longer reduces a loss. The limit of insurance still caps the payment, and valuation does not switch to actual cash value.