Blanket rate

A blanket rate is a premium charged (and applied on a uniform basis) for property insurance covering properties at multiple locations. It is the same rate used for all properties owned, instead of using a specific rate for each location or type of property. This type of rate is used under a blanket insurance policy.

Blanket insurance policies are not for everybody, however it is recommended for those who has multiple commercial real estate properties and have their businesses continuously moving between these properties, have properties that are difficult to move and categorize, and those that need a hedge against inflation swings and valuation errors.

In these situations having blanket coverage is important so that even if the individual property valuation changes there is no need to keep on recalculating the premium amount since all the properties are covered under the same rate.

There are two ways to compute for the blanket rate: by getting the highest blanket rate and by getting the average blanket rate. The highest blanket rate is determined by getting the highest rate that applies to any property covered under the blanket insurance policy. This isn’t ideal in most cases since the same expensive rate will also be used to calculate the policy payments for properties with much lower rates.

The average blanket rate, which is the preferred method, is determined by calculating the individual premiums of each property to be covered under the blanket insurance policy, then adding them all up and dividing the sum by the blanket limit.