What Is Blanket Insurance?
Business property policies can be written in a few different ways. The policy specifies what property or location is covered and coverage is applied. Blanket insurance covers several different properties and situations.
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Definition
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Blanket insurance policies provide a single limit of coverage for multiple locations. Many businesses use blanket insurance to cover several different pieces of property.
Specific Insurance
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Specific insurance is another common form of policy. It provides a single amount of insurance for one specified location. Most homeowner policies are written this way.
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Coverage
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Several different types of property can be covered under blanket insurance. The buildings at each location, goods or merchandise and sometimes business income can all fall under the same blanket of coverage.
Advantages
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The blanket insurance policy spreads insurance to more than one place. Businesses tend to favor this form because it can cover buildings and inventory alike, and the business owner can choose the amount of coverage he needs. This is a benefit when dealing with changing property values and inventory.
Disadvantages
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Insurance companies prefer to insure property at a specific percentage of what its replacement value would be at the time of loss. This is called insurance to value, or coinsurance. Premiums are based on this percentage, and blanket insurance policies usually have a 90 percent coinsurance clause, as opposed to 80 percent for a specific insurance policy, resulting in higher premiums. There is no premium credit for meeting this coinsurance, either, as there is on a specific insurance policy.
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References
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