Blanket Limit
What Does Blanket Limit Mean?
A blanket limit applies to multiple locations or types of property owned and covered under the same policy. When a business purchases a commercial property policy for more than one property, it may be covered by a blanket limit.
This type of coverage offers flexible protection for businesses, especially when property values fluctuate, often making it a better option than specific-limit policies. The limit itself is one part of a broader policy known as blanket insurance, which is the wider category of coverage that uses this approach.
Blanket limits can cover all types of property at a single business location or similar types of property across multiple locations.
The key advantage of this policy is that the entire coverage limit can be used for one property if it is significantly damaged or destroyed.
Insuranceopedia Explains Blanket Limit
A blanket limit often covers multiple locations. For example, if a business purchases a $5 million policy for its various locations in the city, each property could potentially be covered for up to $5 million.
This amount could apply if only one property is destroyed. In a similar scenario, if two properties are damaged, each could be covered for $2.5 million. Essentially, the company is covered for $5 million, which can be allocated as needed. Blanket limits sit alongside specific-limit and scheduled approaches within the different types of commercial property insurance that cover buildings, contents, and stock.
However, there are two important caveats to keep in mind when purchasing blanket limit policies:
- Blanket limit coverage typically costs more than the same coverage provided by other types of property policies. Comparing quotes across business insurance policies can help owners weigh that added cost against the flexibility the blanket approach provides.
- Insurers usually require that all properties included in the policy be insured for at least 90% of their value.