What is Blanket Insurance?

Blanket Insurance is a single insurance limit that covers multiple properties or locations under one policy, rather than separate limits for each location.

What you need to know

If you own three restaurants with blanket coverage of $1.5 million, you can apply that full amount to any single location that suffers a loss, rather than being limited to $500,000 per location.

How blanket insurance works:

With blanket coverage, you purchase a single total limit that applies across all your locations. The insurer doesn’t assign specific amounts to each property—the entire limit is available wherever you need it.

Example scenario:

• You own: 3 restaurant locations
• Blanket limit: $1.5 million total
• Location A suffers fire: Damage totals $900,000
• Blanket coverage pays: Full $900,000 (even though it’s more than one-third of total limit)
• Remaining coverage: $600,000 available for other locations

Blanket vs. Specific Limits:

Blanket Insurance:

• Single combined limit covers all locations
• Flexible allocation – use full limit at any location
• Better for uneven values – protects your highest-value location adequately
• Simpler administration – one limit to track
• Risk of exhaustion – one major loss can deplete coverage for all properties

Specific Limits (Scheduled):

• Separate limit for each location listed individually
• Fixed allocation – Location A has $500K, Location B has $300K, etc.
• Guaranteed minimums – each location has protected amount
• More complex – multiple limits to manage
• Better protection against multiple losses – losses at different locations don’t reduce each other’s coverage

Common blanket insurance applications:

Property coverage:

• Buildings – If you own multiple restaurant properties
• Business personal property – Equipment, furniture, inventory across locations
• Tenant improvements – Buildouts at multiple leased spaces
• Outdoor property – Signs, equipment, furniture at various locations

Equipment breakdown:

• One limit covering all refrigeration, HVAC, and kitchen equipment across locations
• Flexibility to apply full limit if your flagship location has a major equipment failure

Business income:

• Single limit for lost income across all locations
• If one location closes, full limit available for that loss

When blanket coverage makes sense:

Uneven property values: Your locations have significantly different values:

• Flagship location: $800,000 in property
• Location 2: $400,000 in property
• Location 3: $300,000 in property

With specific limits of $500K each, your flagship is underinsured by $300,000. With blanket coverage of $1.5M, your flagship is fully protected.

Fluctuating inventory: Seasonal businesses where inventory shifts between locations can benefit from blanket coverage that follows the inventory wherever it’s stored.

Frequent equipment movement: If you regularly move equipment between locations, blanket coverage eliminates disputes about which location’s limit applies.

Growing operations: Multi-location operators adding new restaurants appreciate the flexibility to adjust coverage without restructuring each location’s individual limits.

Why it matters for restaurant owners

Blanket coverage provides flexibility for multi-location operators. If one restaurant suffers a total loss, you’re not artificially limited by a per-location cap. This is especially valuable when one location has more expensive equipment or higher property values than others.

Real-world scenario:

You own three restaurants with varying property values:

• Downtown flagship: $1.2 million in property (building, equipment, improvements)
• Suburban location: $600,000 in property
• Strip mall location: $400,000 in property
• Total property value: $2.2 million

With specific limits of $750K per location:

• Flagship fire causes $1.2M damage
• You’re paid only $750K (the specific limit)
• You’re underinsured by $450,000 and must pay out-of-pocket
• Your other two locations still have their full $750K limits intact

With blanket limit of $2.2 million:

• Same flagship fire causes $1.2M damage
• You’re paid the full $1.2M (drawing from blanket limit)
• Remaining $1M available for other locations
• You’re fully covered with no out-of-pocket expense

The flexibility advantage:

Blanket insurance solves the “which location is most at risk?” problem. You don’t need to predict which location will have a loss—the coverage automatically flows to wherever it’s needed.

The trade-off: The trade-off is that one large claim at a single location could exhaust coverage for all your properties. If your flagship suffers a $2 million loss and your blanket limit is $2 million, you’ve used all available coverage. Any subsequent losses at other locations during the same policy period would be unprotected.

Cost considerations:

Blanket coverage typically costs:

• 5-15% less than the sum of equivalent specific limits
• Insurers charge less because they’re not guaranteeing specific amounts at each location
• Your total premium is based on the combined exposure, with better efficiency

Requirements for blanket coverage:

Most insurers require:

• At least 80% coinsurance – You must insure to at least 80% of total property values
• Accurate property valuations – Each location must be properly valued
• Regular updates – Annual review of values as properties improve or deteriorate
• Minimum number of locations – Usually 2+ properties to qualify for blanket treatment

Risks and limitations:

Concentration risk: If all your locations are in the same geographic area, a single event (hurricane, earthquake, riot) could damage multiple properties simultaneously, quickly exhausting your blanket limit.

Inadequate total limit: If you set your blanket limit too low to save premium, you may be underinsured if:

• Multiple locations suffer losses in the same policy period
• Your highest-value location has a total loss
• Property values have increased since you set the limit

Coinsurance penalties: If you fail to maintain adequate blanket coverage (usually 80% of total property values), you’ll face coinsurance penalties that reduce your claim payments.

Essential practices:

• Calculate total insurable values accurately – Add up all property at all locations
• Set blanket limit appropriately – Usually 90-100% of total values, minimum 80%
• Update values annually – Property values change with improvements and inflation
• Consider catastrophe exposure – If one event could hit multiple locations, increase limits
• Review after acquisitions – Adding locations requires increasing blanket limit
• Coordinate with specific coverage – Some items may still need specific limits (expensive equipment)
• Understand the coinsurance clause – Maintain required coverage percentage to avoid penalties
• Model different loss scenarios – Ensure blanket limit can handle your worst-case loss

When specific limits are better:

Consider specific limits instead of blanket if:

• Locations are very different – Vastly different risk profiles (downtown vs. rural)
• You want guaranteed protection – Each location needs minimum assured coverage
• Lender requirements – Banks may require specific limits for financed properties
• Catastrophe exposure – All locations in hurricane/earthquake zone
• Franchise agreements – Franchisors may mandate specific minimum coverage per location

Hybrid approach:

Some restaurant owners use both blanket and specific limits:

• Blanket coverage for general property, equipment, inventory
• Specific limits for unique high-value items (specialized equipment, liquor inventory)

This provides both flexibility and guaranteed minimum protection where it matters most.

Bottom line: Blanket insurance offers valuable flexibility for multi-location restaurant operators, especially when property values vary significantly between locations. However, it requires careful limit selection, regular valuation updates, and understanding that one major loss can impact coverage availability for all your properties.