Blanket Insurance Coverage for Commercial Properties

Most commercial properties use a type of insurance referred to as “specific coverage,” in which a specific property is insured for a named risk, such as fires, floods, thefts and more. However, specific coverage is also somewhat limited; oftentimes, one policy will only cover one named risk at one location.

This is why blanket insurance coverage could be the ideal option for commercial properties. Blanket insurance can cover more than one type of property at one or more locations, or one type of property at multiple locations, all under one policy and with a single limit.

Blanket policies also offer protection for any equipment, inventory or furnishings located in or around the covered structures. As a result, blanket coverage can make it easier to cover all the risks that threaten your properties. However, it’s important to know the characteristics of blanket coverage to see if it can adequately protect your business.

Blanket Insurance Basics

Blanket insurance coverage is not exclusive to commercial properties. For instance, homeowner’s insurance is a type of blanket insurance because it covers (blankets) both the home itself and the belongings within it. Blanket coverage can be especially beneficial for landlords and franchise owners who have multiple properties and want the convenience of a single policy.

In order for blanket insurance coverage to apply, the properties needing coverage must all be similar in nature and functionality. For example, blanket coverage would usually not cover a business’s warehouse and storefront under the same policy. Blanket coverage would, however, cover multiple restaurant locations that are operating under a single chain.

Coverage under a blanket policy is generally triggered in the event of any loss associated with a named property. Such an event may include fires, floods, thefts, personal injury liabilities and more. And although it typically costs more than specific coverage, blanket coverage often provides broader protection than specific coverage by simultaneously protecting against each of these liabilities.

Unlike specific coverage, which only provides protection for items that are individually listed in the policy, blanket coverage provides broad coverage for your business’s property — even if it’s moved between two or more locations. This allows for more flexibility if you frequently move equipment to conduct business.

Coverage Limits

Under a blanket policy, all of your buildings and the property in them are covered until the total policy limit is hit. The total policy limit can be determined by summing together the values of each structure, including the property within them.

For example, imagine your business owns three warehouses that are each valued at $1.5 million. As a result, you would purchase a blanket policy with a limit of $4.5 million to protect all three properties. If one warehouse was destroyed in a fire and the cost to replace the building was actually $1.75 million— more than the originally estimated value of the property — your blanket policy would still provide full coverage (up to the $4.5 million limit).

A specific coverage policy in the same scenario would only reimburse you up to the limit of the single property, leaving $0.25 million left uncovered. Hence why blanket coverage may be worth the greater investment.

Finding the Right Policy for You

Although blanket coverage often provides broader protection than specific coverage, the policy that’s right for you can vary based on a multitude of factors.