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Blanket Cover

Blanket cover in insurance is a type of coverage that allows you to insure multiple properties, items, or risks under a single limit of insurance. This approach contrasts with specific insurance, where each asset or risk would require its own individual coverage limit.

What is Blanket Cover in Insurance?

In more detail, blanket cover is designed to simplify managing insurance policies by combining various items or properties into one policy with a collective coverage limit. This means that the total insurance amount can be used towards a claim on any of the insured items, without the need to allocate specific limits to specific assets.

Example: Consider a business that owns multiple buildings and contents across different locations. Instead of insuring each property under a separate policy, a blanket cover policy could encompass all properties under one total insured amount. If one building suffers damage, the business can use as much of the insurance limit as necessary to cover the repairs, up to the total insured value of the policy.

Key Components of Blanket Cover

  • Aggregate Limit: The aggregate limit is the maximum amount an insurer will pay under a blanket policy during the policy term. This is a crucial component as it defines the financial ceiling for claims.
  • Items Covered: Under blanket coverage, multiple assets are insured under one policy. These can include buildings, equipment, inventory, or even different types of risks like liability exposures.
  • Flexibility in Coverage: Blanket cover provides flexibility in how claims are addressed, as the total coverage can be applied to any of the insured assets, which is particularly beneficial in scenarios where the value of specific assets might fluctuate or not be precisely known.

Types of Blanket Cover

Property Blanket Cover

This type typically covers all real estate properties owned by a business, offering a combined limit for damages to any of the properties listed in the policy.

Contents Blanket Cover

Contents blanket cover is used to insure all contents in specified locations, useful for businesses with high-value or diverse assets spread across different sites.

Business Interruption Blanket Cover

This coverage helps a business recover lost income and other expenses if the business is temporarily unable to operate due to a covered loss, applying broadly across all operations.

Combined Blanket Cover

Some policies combine various types of risks (like property, contents, and business interruption) into a single blanket cover to provide comprehensive protection under a unified limit.

How Insurance and Blanket Cover work

Blanket cover policies are generally underwritten based on the total value of all insured items or properties, rather than assessing the risk of each individually. The insurer evaluates the overall risk exposure and sets a premium accordingly. In the event of a claim, the insurer will assess the damage and provide compensation up to the limit of the policy, regardless of which specific item or property the claim is for. This approach can often result in a more streamlined claims process and potentially lower insurance costs due to economies of scale.