What Is Blanket Insurance Coverage and How Does It Work?

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Young woman with guitar (Photo: @criene via Twenty20)
If you’ve had a loss of some kind (perhaps your priceless guitar was stolen from your car), you’ve probably flipped through your insurance policy furiously to see if it’s covered. You’re searching for specific coverage components in your car insurance to see what’s included. But if you have blanket coverage, it’s different.
Blanket insurance coverage is a different type of insurance product that’s more common than you may think. You may even have a blanket policy now but not realize it. It’s a single insurance limit that covers more than one location or type of property, or both.
So, how does it work, and who needs blanket insurance coverage?

How Blanket Insurance Works

When you purchase a blanket insurance policy, a single coverage limit applies to anything that falls under that “blanket” of coverage. As long as everything under the blanket belongs to the same owner, it’s covered by the policy.
One example of blanket insurance coverage can be a home insurance policy. Some insurance providers offer a cap on damages regardless of cause for a loss as long as the property is insured. While that’s a simplified explanation, a scheduled policy defines a maximum insured value for specific components of the policy. That could mean that the property is covered but the belongings aren’t. It depends on the policy.
A blanket insurance policy, on the other hand, covers both the home and the property within the home, up to a maximum value.

Who Benefits from Blanket Insurance?

For one, blanket insurance coverage can be great for homeowners as there’s less red tape to wade through if a claim needs to be made. There are great options available for both blanket and scheduled insurance policies. And although tailored coverages in a scheduled policy can keep costs down, the peace of mind from blanket insurance may be worth it.
If you’re part of a homeowners’ association (HOA) community, there’s a good chance you have shared spaces that are insured by the HOA. It’s true whether you’re in a condo or townhome, or if there’s a shared park or community center. An HOA will include your portion of a blanket insurance policy in your HOA fees, then make any claims on behalf of the community if a loss occurs.
Businesses are also able to benefit from blanket insurance, especially where multiple locations are involved. For example, if a company has three locations worth $1 million, $2 million, and $3 million, respectively, the cumulative blanket insurance is for $6 million. If the $2 million-dollar property has a loss that would be $3 million to repair or replace, the blanket policy is able to cover the spread. Without blanket coverage, the company would be on the hook for a $1 million loss.
The types of properties that can be covered by a blanket insurance policy are many. It can apply to industrial manufacturing, apartment residents, businesses, recreational facilities and campgrounds, and homeowners.