Blanket Insurance: How It Works

What is a blanket policy? Blanket insurance policies allow an insured to “cover” (thus blanket) multiple pieces of property or multiple property locations with a single policy.

The most common way to insure multiple properties or multiple locations is to list them separately, along with the amount of applicable insurance next to each on the policy declarations page. This is important because it will break down what additional coverage you have in case of any accidents or injuries dealing with your property – home, auto, or otherwise.

Listing property separately is referred to as “scheduling,” and “specific insurance” is the term used to describe this method of insuring the property.

What does blanket insurance cover?

To fully understand the blanket insurance definition, take a look at a hypothetical example of blanket building coverage:

• $250,000 coverage for building 001 at property address 123 Oak Street, Joliet, IL 60435
• $50,000 coverage for business personal property (BPP) at property address 123 Oak Street, Joliet, IL, 60435

Ultimately, you have two separate limits of coverage for the building and the business personal property (BPP).

You may also have separate locations that contain their own BPP, both with their own separate limits. That way, you can protect both your home and your business.

You can also get a blanket auto insurance policy. If you don’t own a business, with blanket car insurance you could cover your home and your vehicle.

Instead of going this route, another option is getting a policy that covers everything that would be at risk. If you own commercial property and personal property, you could put them under the same policy.

A blanket policy covers either multiple pieces of business property and/or multiple property locations with one limit of insurance.

Let’s look at an example of how this coverage would look for the same business, only with a blanket coverage amount:

• $300,000 blanket coverage on the building and BPP at 123 Oak Street, Joliet, IL, 60435.

This example now bundles the two that were shown above into one. It not only has the property coverage but also the BPP listed as well.

Why should I get blanket coverage insurance?

There are really two instances where blanket insurance coverage would benefit you in case of any accidents.

First, imagine you had multiple property locations with BPP within them.

If you purchase specific insurance, it would be necessary to determine as close as humanly possible, the exact value of the building and the property inside.

In the event of an insurance claim at a single location (a fire, for example) you will only be able to collect up to the policy limits, assuming you met the co-insurance requirement.

What would you do if you underestimated the value of the building and property within? Odds are, you’d be out of luck and would have to simply accept the amount you were insured for.

With blanket coverage, your limits of the blanket, which would be much higher, would very likely be high enough to cover a claim at any one location.

What’s the difference between specific insurance vs. insurance blanket coverage?

Specific Insurance Policy

Building 1: $200,000 coverage

BPP at Building 1: $50,000 coverage

Building 2: $200,000 coverage

BPP at Building 2: $50,000 coverage

If you suffered a loss at Building 1, where $75,000 worth of BPP was destroyed (as a result of your property value estimate being too low), you would not be able to recover finances equivalent to the damage done to your property.

Blanket Insurance Policy

Building 1 & 2: covered at $400,000 “blanket”

BPP at building 1 & 2: covered at $100,000 “blanket.”

The same peril that damaged the property would easily be covered under the $100,000 blanket, no questions asked.

Of course, you would have to meet the co-insurance requirement, which states you must carry coverage equal to at least 90% of the true value of your buildings and business property at the time of the loss.

This means you must have been carrying at least $90,000 in BPP coverage at the time of the loss.

If you carried $100,000 in coverage for BPP, you would technically be covered up to $111,111.11 worth of damage (expressed as $100,000/90% = $111.111.11).

Commercial insurance can be difficult to understand and there are many factors and coverage types available in today’s marketplace.

This can seem like a lot to consider, but in the long run, if you think you might need various amounts of coverage for the types of property you own, it may be in your best interest to carve out some time in order to look into your coverage options. It’s always a good idea to sit down with an independent insurance agent who specializes in commercial insurance to make sure you are properly covered at the best price possible. They’ll be able to go over what type of policy you would need, what your policy limit would be, and how much you’d end up paying. Breaking it down into smaller, manageable pieces, eventually getting you where you need to be in terms of protection.

Read More: What are the benefits of insurance and why does it exist?