Blanket rates are insurance rates that are provided to a client who owns multiple properties and wishes to include all those properties under the same blanket of protection. The idea behind the blanket rate is to provide the client with the coverage needed without the necessity of using multiple property insurance contracts to accomplish the task. At the same time, this approach simplifies the process for both parties, since one rate is in place for all properties covered rather than having to keep up with different rates applied to each property.
An example of how a blanket rate would be applied is found with a property owner who holds the title to several different apartment complexes located in different areas of a city. Rather than evaluating each of those properties individually and issuing premiums for each one of those complexes, the property insurance provider will assess the properties as a whole, taking into consideration the classification of each complex based on location, crime rate, and other relevant criteria. From there, the provider will create one rate that applies to all the properties. If the rate is acceptable to the customer, the contracts are written and the coverage goes into effect.
There are actually two different ways to determine the best blanket rate for a given customer. One approach is to go with the highest blanket rate. This is simply the highest rate that would be charged on any one of the properties, applying that rate to all the holdings. A different approach is to go with an average blanket rate, which essentially takes the individual rates and uses the data to come up with an average rate and coverage that will apply to all the properties. Depending on the types of properties held, their locations, and the amount of business movement that occurs between different properties, such as movement between a factory and a warehouse, one approach may be more advantageous than the other.
While a blanket rate does offer certain benefits, this approach is not necessary the ideal solution for every scenario involving multiple properties. In order to determine if a blanket rate is in the best interest of the client, property owners should compare all costs associated with maintaining individual plans on each holding versus going with a blanket approach. Depending on the divergent nature of the properties, uses of those properties and the locations involved, taking the time to purchase property insurance for each holding individually may be a better strategy.
