What Is a Blanket Insurance Policy?

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  • What Is a Blanket Insurance Policy?

If you’re new to the insurance world, blanket insurance can be a hard concept to wrap your head around. It doesn’t help that there are different kinds of blanket insurance policies, each with a totally different definition. 

But don’t worry, blanket insurance won’t be hidden under the covers for long. This guide explains everything you need to know about blanket insurance for multiple locations, blanket property coverage, and more. 

What Is a Blanket Insurance Policy?

At its core, blanket insurance is an insurance policy that covers more than one thing. It’s a broad category that can take on many different forms. Sometimes, blanket insurance means a policy that covers different types of property at the same location. Other times, it means one single policy for multiple locations. Still other times, it refers to an add-on that gives you more coverage for your personal property

Read on for in-depth descriptions of the different types of blanket insurance.  

What Does Blanket Insurance Cover?

The answer to this question depends on your specific blanket policy. Your policy will outline what kinds of things fall under the blanket in your case. Instead of listing individual named items, it will explain the category of items or types of property covered. 

Here are a few examples of what a blanket insurance policy might cover:

  1. A building, such as a home, and the belongings contained inside, such as furniture, electronics, and clothes
  2. Multiple properties owned by the same person or company, such as different locations in the same restaurant chain 
  3. Personal property, such as clothes, and business equipment, such as computers and other supplies in your home office, at the same location 
  4. A collection of personal belongings that fall under the same category, such as jewelry or electronics 
  5. Common areas shared by all members of a condo association or homeowners association (HOA)

In a nutshell, what your blanket insurance covers depends on the type of insurance you’re talking about.

Blanket Homeowners Insurance

Your standard homeowners insurance is a type of blanket policy in and of itself. Think about it: home insurance includes dwelling coverage for the actual structure of your home and personal property coverage for your belongings inside. That means it covers more than one type of property, making it blanket insurance. 

No matter what type of homeowners insurance you opt for (HO-1, HO-2, HO-3, HO-5, HO-7, or HO-8), it automatically comes as a blanket policy covering your dwelling and belongings. 

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Blanket Auto Insurance 

Technically, there’s no such thing as blanket auto insurance. Even though comprehensive car insurance covers your car if it’s damaged due to a storm, vandalism, theft, or similar event, this type of policy will only help pay for repairs to the vehicle itself. Car insurance doesn’t typically reimburse you for items inside the car that get damaged or stolen

The good news is that personal property contained in your car usually falls under the blanket of your homeowners or renters insurance. So, if someone busts open your car window and steals your laptop, you would file a claim with your auto insurance to replace the window and another claim with your home or renters insurance to replace the laptop. 

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Blanket Condo Insurance

When we’re talking about condo insurance, the term blanket insurance refers to the master policy that covers common areas, such as a swimming pool, communal gym, laundry room, or parking lot. 

Blanket condo insurance isn’t something you as a condo owner have to worry about. Your condo association is in charge of this policy, and the cost is usually split among all residents and included in HOA fees or dues. 

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Blanket Rental Property Insurance 

If you’re a landlord who owns multiple rental properties – whether they’re homes or apartment buildings – blanket insurance is one overarching policy that includes all your properties under the same limit. 

Here’s what that means for you as a landlord: Let’s say you own an apartment complex valued at $500,000, another valued at $800,000, and another valued at $1 million. Instead of taking out three separate insurance policies, you would purchase one blanket policy with at least $2.3 million (the value of all three properties added together) worth of coverage. 

Then, let’s say a fire burns down the $500,000 property, and the cost to rebuild from scratch is $700,000. The full $700,000 would come out of your insurance because that’s less than your blanket limit of $2.3 million. On the other hand, if you took out an individual policy on just that one building for $500,000 worth of coverage, you would be stuck paying the extra $200,000 out of pocket. 

As you can see, blanket insurance for rental properties can be extremely handy in the event of a disaster. However, as always, you have to pay for that extra coverage. Blanket insurance typically costs about 10% more than regular insurance, so it may not be the best choice for every landlord. 

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Blanket Commercial Property Insurance 

In business insurance, a blanket policy can cover multiple properties at different locations under the same limit, as long as the properties are used for similar purposes. 

So, if your company owns five grocery stores, you can purchase one blanket insurance policy to cover all of them instead of insuring each one individually. But if you also own a warehouse where you keep extra stock, you couldn’t include it under the same blanket as the storefronts since the building is used for something different. You would have to purchase a separate insurance policy to cover the warehouse. 

Blanket limits for commercial properties work the same way as blanket limits for rental properties (see the example above). Blanket commercial property insurance also costs about 10% more than regular commercial property insurance

Blanket HOA Insurance

As with condos, blanket insurance for HOAs covers common areas shared by all residents of a neighborhood. If your neighborhood has something like a tennis court, playground, or clubhouse that gets damaged, HOA blanket insurance would help pay for those repairs. 

Also like with blanket condo insurance, homeowners don’t have to take out blanket HOA policies for themselves. The association will manage the policy, and a portion of the members’ fees or dues will pay for it. 

How Does Blanket Property Insurance Coverage Work?

Even though they sound similar, blanket property insurance coverage isn’t the same thing as a blanket insurance policy. Blanket property coverage is not a standalone policy. It’s an endorsement (aka an add-on) for homeowners, renters, or condo insurance that increases your personal property coverage. You may need to add blanket personal property coverage to your insurance if the value of your belongings exceeds the existing personal property limit in your policy. 

Most home insurance policies include coverage limits for different categories of high-value items. Even if your policy covers $10,000 worth of personal property overall, that might include a $2,000 limit on jewelry, a $3,000 limit on electronics, and a $1,000 limit on firearms.

So, say someone broke into your home and stole your computer, TV, sound system, PlayStation, and iPad for a total value of $5,000. Even though that’s within your overall personal property limit, your insurance would only pay $3,000 to replace your items because of the limit on electronics. 

This is where blanket coverage can come in handy. Blanket coverage increases your policy limit on an entire category of items. In our example, if you know you own $5,000 worth of electronics, you could add a blanket coverage endorsement for electronics to your home insurance policy to increase that limit. Then, your insurance would pay the full cost to replace your items if they were stolen or damaged. 

Blanket Coverage vs. Scheduled

There’s another type of insurance endorsement that’s similar to blanket coverage, but it’s not the same thing. This endorsement is called scheduled personal property coverage. Scheduled coverage still increases your personal property limit, but it only applies to one specific, named item instead of a whole category. 

If you own one particularly expensive necklace that exceeds your policy’s jewelry limit, for example, you might “schedule” that necklace on your insurance to increase its coverage. But if you own multiple pieces of expensive jewelry, you’ll want to go with blanket jewelry coverage instead. 

How Does Blanket Liability Insurance Work?

For clarity: There is such a thing as blanket liability insurance, that’s just not what it’s called. When it comes to liability insurance, blanket coverage is called umbrella insurance. Just like a blanket endorsement increases the personal property coverage limit on your insurance, an umbrella endorsement increases the liability coverage limit on your insurance. 

Liability coverage is the portion of your insurance that helps cover medical bills and legal fees in case a guest gets hurt on your property and you’re at fault. This could be anything from your dog getting out and biting the mailman to your child’s friend falling off the trampoline and breaking their arm. 

Most standard home insurance policies come with $100,000 of liability coverage automatically, and you can usually increase that limit up to $500,000. But if you’ve ever had to stay in a hospital for an extended period of time, you know that medical bills can get more expensive than $500,000 – a lot more expensive, in some cases. And if the person decides to sue you, you’ll have to pay legal fees on top of that. 

If people are more likely to get hurt on your property, like if you own an attractive nuisance such as a swimming pool or trampoline, you can add umbrella insurance to your policy to increase your liability limit up to $5 million.

Blanket Insurance vs. Umbrella Insurance

Remember, blanket insurance and umbrella insurance aren’t the same thing.

Blanket insurance can either refer to an insurance policy that covers multiple types of property or an endorsement that increases personal property coverage. 

Umbrella insurance is an endorsement that increases the personal liability coverage on your home, renters, or condo insurance.

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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.