Blanket Insurance Definition, What It Covers, Who Needs It

What Is Blanket Insurance?

Blanket insurance is a single property insurance policy that covers more than one type of property at the same location, the same kind of property at multiple locations, or various kinds of property at two or more locations. It covers personal possessions and the physical dwelling, "blanketing" all the homeowners' possessions.

How Blanket Insurance Works

Blanket insurance usually offers broader protections than a typical individual policy. Although it's more expensive, the additional covered perils may make it worth the investment.

Blanket insurance is relatively common in everyday life. Mortgage lenders often require borrowers to get homeowners insurance to protect the lender and the property from damage or theft. Homeowners insurance is a type of blanket insurance since it covers both the structure and the contents of your house against loss.

For landlords who own multiple apartment units, blanket policies can provide a single limit for all properties. The maximum amount payable under the policy is divided among all the properties. For example, franchise owners who own several fast-food restaurants at different locations can buy a blanket policy with a single limit to cover all their stores under one policy.

Consumers can also purchase blanket health insurance—although they might need to customize the policy to meet their unique needs. For example, if someone has an adult parent living at home, the parent may not be considered a dependent under an individual health plan. However, purchasing blanket health coverage may allow them to place their parent on their health insurance, regardless of tax designation.

Who Needs Blanket Insurance?

Individuals who don't own multiple properties or don't have complicated health insurance needs may not need a blanket insurance policy. Instead, pursuing individual policies and adding riders as necessary might be more cost-effective. An insurance rider is an add-on benefit to a basic insurance policy that provides additional coverage for a specific need.

A blanket property insurance policy may be ideal if you own multiple properties, whether they are residential, rental, or commercial.

Any type of blanket policy, such as blanket medical insurance, should be evaluated on a case-by-case basis. That's why it's important to work with a knowledgeable insurance agent who can customize a package of coverages that fits their unique needs.

Blanket insurance policies can cost more than conventional policies. However, for some, bundling insurance into a blanket policy can save money.

The Bottom Line

Blanket insurance can refer to a broad set of protections or coverages. Blanket insurance can mean a policy that covers multiple property types on a single property. Homeowners insurance can also be considered a type of blanket insurance since it covers your property structure and the contents in your home and provides liability insurance in case you're sued.