If you have ever heard the term blanket insurance, you are not alone. This term is widely used in the insurance world, but its exact definition and many types are not always clear. Most people assume a blanket policy covers every type of claim, but what exactly is it, and what does it really do?
A blanket insurance policy is a type of policy that offers more than one thing. It is a very vague and broad category that can have many different meanings and types. In most cases, it can be a policy that covers different property types in one location, a policy that covers multiple locations, or an add-on for more personal property coverage.
There can be a lot of confusion when it comes to blanket insurance policies. In this article, you will learn more about blanket policies and the different types of policies that are available in the market today, as well as how this term is used.
- A blanket policy is a term used when an insurance policy covers more than one thing within the same policy.
- Blanket policies can be found with auto, renters, home, and condo policies.
- Blanket insurance policies do not typically increase personal liability thresholds.
Blanket insurance policy coverage
The term blanket does not mean that an insurance policy will cover anything and everything with the property listed. It can actually mean many different things depending on the type of blanket policy someone holds. For a clearer understanding, we have listed some examples below.
- Personal property. Some blanket policies cover all of the furniture, electronics, clothing, and other personal items stored within a dwelling or business structure.
- Multiple properties. Large restaurant chains often have blanket policies that cover their many locations if owned by the same entity.
- High-value items. Jewelry, computers, and other expensive personal items may be covered under certain blanket policies.
- Common areas. Shared laundry areas, lobbies, and other common areas are often covered under a blanket policy.
There are different types of blanket policies, depending on what type of insurance you are referring to. Each type of insurance has its own blanket policy. For example, homeowners, autos, and condos all have different blanket policies.
Blanket insurance by type
As previously mentioned, each type of insurance has its own blanket insurance policy. It is important to note that these policies cover different things depending on the type of insurance you have. Listed below is a breakdown of each type of blanket insurance policy and how it works, as well as what it covers.
Homeowners
A standard homeowners policy is commonly referred to as a blanket policy because it covers a wide range of risks. The reason for this is that it covers the actual dwelling, the personal property contained within, as well as the other structures on the property. In essence, it covers more than one thing, making it a blanket policy.
Auto
There is no such thing as a blanket policy when it comes to car insurance. Even the most comprehensive car insurance policies are not blanket policies. The reason for this is that this type of policy only covers damage to the covered vehicle when it is involved in an accident. In the event of a vehicle being damaged or stolen, any personal property inside the vehicle will not be covered under the policy.
While your auto insurance will not cover your personal property within your vehicle, your homeowners or renters insurance will. This is because a renters or homeowners insurance policies are blanket policies. So if your car is parked at home and it’s burglarized, your homeowners or renters insurance will pay for the stolen item(s).
Condo
The master policy that covers common areas like a shared laundry or clubhouse is considered to be a master policy. This type of insurance is not purchased by individual condo owners. In lieu of this, the condo association purchases the master policy, which can be viewed by residents within the condominium complex.
Rental property
Having a blanket insurance policy is likely to be the best option if you own more than one building as a landlord. This policy covers all the properties under one, at the same limit. But what exactly does this look like?
Say you own three properties. Property A is valued at $500,000, Property B is valued at $250,000, and Property C is valued at $750,000. Instead of taking out an insurance policy for each property, one blanket property is selected with a coverage limit of $1.5 million.
Now, pretend that Property C burns down in a fire and is a total loss. When the bill to rebuild comes back is in, it is listed at $1 million due to inflation. This blanket policy will provide the full $1 million because its limit is $1.5 million. If the policies were all separate, the landlord would have to pay the remaining $250,000 out of pocket.
This is why it is common to have blanket insurance on rental properties. As well as being cost-effective in terms of the premium, it is also easier to use since it has a higher limit, which makes it easier to submit a claim.
Commercial property
If you are a business owner who owns multiple properties, all conducting similar business, then you are able to purchase a blanket insurance policy for each location under one topped-out limit. For example, if you own seven janitorial franchises, you can cover all of them under om blanket insurance policy. Then, if a claim were to occur, it would be under the blanket policy with its specific limits. It is similar to how a blanket policy works for a rental property, except the annual premium is often more expensive.
Blanket insurance vs scheduled insurance
The concept of blanket insurance is sometimes confused with the concept of scheduled insurance. Scheduled personal property coverage increases a policyholder’s personal property limit for one specific named item within a category.
For example, if you possess your grandmother’s heirloom emerald ring that is worth a great deal of money and is a family heirloom, you may wish to schedule it. If the item is damaged by an event that is covered by the policy, then this will cover the damage.
If you own a lot of jewelry that is expensive, it may not be a good choice to schedule each item. To ensure that all pieces are covered rather than just the scheduled item, it may be better to purchase a blanket insurance policy.
Blanket vs umbrella insurance
Another insurance term that is often confused with blanket insurance is umbrella insurance. Umbrella insurance is an endorsement that increases the limit for personal liability coverage on the property that is covered. This type of insurance is available for homes, condos, and renters.
While blanket insurance can provide coverage for a wide range of types of property or can be used as an endorsement to increase personal property coverage, it does not increase personal liability coverage.
Your blanket policy has you covered
When shopping for insurance, don’t focus too much on whether a policy is considered a blanket policy or not. Instead, look at the items that it covers and the annual premium associated with the coverage. If the insurance fits your needs, select it. There are many different types of great insurance policies available, and the term blanket should not make or break a decision.
