If you own multiple buildings or own a lot of specialized equipment that you want to make sure is properly covered by your insurance, you may want to consider blanket insurance. True to its name, blanket insurance acts as a blanket over anything that’s underneath it and provides one overall limit for multiple items, whether that’s buildings or various pieces of equipment.
Blanket insurance is something that you’ll probably want to talk to your local independent insurance agent about, because they’ll be able to help you determine whether blanket insurance is a good fit for you.
What Is Blanket Insurance?
Blanket insurance is a type of insurance coverage that allows you to cover multiple buildings and/or specialized personal property under one big limit. This is different from standard insurance where each building or specialized personal property is listed separately with specific limits that only apply to that one category.
The word "blanket" is a good description of this type of policy, because it covers multiple items under one limit. Blanket insurance is not a separate category of insurance, however. It’s simply an option that you can apply to many of your existing personal or commercial insurance policies.
How Does Blanket Insurance Work?
Blanket insurance works by grouping together each building, location, and/or personal property and insuring it all for one limit. It’s typically more expensive than insuring the traditional way, which is basically to list each building separately with its own limits.
When you’re determining your blanket limit, your insurer will want you to use a certain "insure-to-value" number or percentage. This just means that in order to qualify for blanket coverage, you’ll need to insure your buildings or items for at least 80% or 90% of their total replacement cost.
For example, if you tally up the value of your farm equipment and come up with $500,000, then your insurance company is likely to want you to have blanket coverage of at least $450,000. You may not have to insure everything for 100% of its replacement cost value, because your insurer knows that the chances of a total loss on every item in the blanket is unlikely.
As part of the insure-to-value requirement, your insurer will also want you to provide a list of everything that’s covered under the blanket. A list of the covered items, along with their values, lets the insurance company know what they are insuring, and also makes it easy to determine the appropriate insure-to-value coverage limit.
With most personal contents, whether it's business personal contents or your contents under your homeowners policy, you won't need blanket coverage because you're already getting it. You will only want blanket coverage on contents if they are spread out over various locations, or they are specialized. Specialized contents include farm equipment, jewelry, or other valuable collectibles.
What Types of Blanket Insurance Are There?
Blanket insurance can apply to different types of insurance policies and is more of a coverage option than a separate insurance policy. Some of the most common places to find blanket coverage include:
- Blanket commercial buildings. Owners of multiple buildings may opt to insure all buildings under one big limit. This is commonly used for owners of multiple apartment units or businesses with two or more buildings adjacent to each other.
- Blanket business personal property. Blanket coverage is commonly applied to business contents coverage, particularly if the contents are spread out over different locations. Having one big limit ensures that each location’s contents would be covered in full.
- Blanket farm equipment. Farmers often use blanket coverage on all their farm equipment. The main benefit to farmers is the same as with businesses, that they can have all their tools and equipment insured under one big limit and they won’t have to worry about not having enough insurance on any one item.
- Blanket jewelry. Many people schedule their jewelry on their homeowners insurance, but if you have a lot of jewelry, you may be able to buy blanket jewelry coverage.
- Blanket personal property. Similar to jewelry, if you have other valuables such as many firearms, antiques, electronics, or anything that you want to make sure that you have specific coverage for, you may be able to lump all of those items into one higher limit blanket insurance option.
- Homeowners insurance. Technically, homeowners insurance is a type of blanket coverage. While you’ll typically have separate limits for your house, other detached structures on your property, and your personal contents, all of that is contained in one blanket policy.
Who Needs Blanket Insurance?
Blanket insurance doesn’t apply to everyone in every situation. It’s mainly used for people or businesses that either have more than one location, or they have a lot of different tools or equipment, such as farmers.
Farmers need to specify their equipment because farm equipment isn’t automatically covered under homeowners insurance, since it’s used for farming. So if farmers want their tools and equipment covered, they need to list them(schedule them) on their policy. They can either have a per item coverage limit or a blanket limit.
Businesses with one location but a lot of equipment won’t need blanket insurance because they can simply insure all of it under their business personal property coverage. But if the equipment or contents are spread out over various locations, blanket coverage can make sense.
The Benefits of Blanket Insurance
The biggest benefit of blanket insurance is not having to worry if any one building, location, or piece of equipment or jewelry is insured at 100% of its value. Without blanket insurance, if any of your buildings or items are not insured for 100% of their value, then you won’t receive the full amount they are worth. And with commercial buildings, you may even be penalized through coinsurance if you don’t have enough insurance coverage.
The problem is that unless you do an appraisal each year, you’re not going to be completely sure if your buildings or items are insured for their full value.
Blanket insurance solves that problem. Since your blanket limit will be much higher than each individual building or item’s worth, then you’ll receive the full amount of its value if you have a claim.
So rather than worry about each individual building or item being insured properly, you just have to make sure your blanket limit is high enough to maintain coinsurance and insure-to-value requirements, which is typically 80% to 90% of the total value of the buildings or items.
Blanket insurance gives you more room for error in these calculations, because you can afford to be off in your valuation if you have a partial loss, which is much more likely to happen than a total loss.
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How Much Does Blanket Insurance Cost?
Blanket insurance is more expensive than standard insurance coverage that lists, or schedules, each building or item to be covered individually. The exact cost of blanket insurance will vary based on what you’re insuring, but a general rule of thumb is that blanket insurance is roughly 10% more expensive than insuring everything separately.
The Benefits of an Independent Insurance Agent
A local independent insurance agent is your expert when it comes to making sure you have the proper coverage in place and giving you options on how to protect things. They can give you the pros and cons for your specific needs and whether blanket insurance is the best option for you. They’ll also be just a phone call or email away to make quick changes to your policy as your blanket limit goes up or down.
And if you have a claim, you can be sure that your independent insurance agent will be there to get your claims check to you as quickly as possible. Be sure to talk with an independent insurance agent today to find out if blanket coverage is a good fit for you.