Blanket Limit

A blanket limit applies to multiple locations or types of property that is owned and covered under the same policy. When a business purchases a commercial property policy for more than one business-owned property, it may be covered by a blanket limit.

This type of coverage provides flexible protection for business when there is fluctuation in their property values, which is often better than other specific limit type policies.

Blanket limits can apply to all types of property at one business-owned location or similar types of property at many locations.

The major advantage of purchasing this type of policy is that you can use the entire coverage limit on one property if it is significantly damaged or destroyed.

Insuranceopedia Explains Blanket Limit

A blanket limit often covers a number of different locations. For example, if a business purchases a $5 million policy for the multiple locations it owns in the city, each property potentially could be covered for up to $5 million.

This amount could apply if it were the only property destroyed. In a similar example, if two businesses had damages, each could potentially be covered for $2.5 million. Basically, the company is covered for $5 million, and this can be split as required.

There are, however, two important caveats to remember when purchasing blanket limit policies:

1. Blanket limit coverage generally costs a bit more than the same coverage with other types of property policies.
2. Insurers usually only allow blanket limit coverage when all properties included in the policy are insured for a minimum of 90% of the value.