Blanket Insurance

The word blanket is used in short-term insurance surprisingly often and the meaning can be interpreted in different ways. In very literal terms one can think of short-term insurance for your car, house or contents in terms of a blanket – covering your belongings against the risk of loss or damage.

Different meanings when referring to blanket in insurance

A short-term insurance company may announce that there will be a blanket increase in the rates asked for car insurance. In this case the meaning is that the increase will apply to all car insurance policy holders’ premiums equally. This is not always the case; more often you will find short-term insurance companies increase rates according to the profile of the individual client.

What is a blanket insurance policy then?

The definition of a blanket insurance policy is

One that covers more than one item of property at the same place, or one or more items of property at different places

or

One that covers common areas of sectional title buildings where different units in a complex belong to different owners.

Let us look at each definition in more detail:

A blanket insurance policy covering more than one item of property at the same place

Insuring your personal jewellery forms part of a home contents insurance policy. You will usually find that you will have blanket cover, meaning that all your jewellery is covered under the same amount of insurance, called blanket cover. However, your insurance company will stipulate that individual pieces over a certain amount should be specified individually.

You will also have one blanket amount covering your household contents and the same principal of specifying specific items of value will apply here.

A blanket insurance policy covering one or more items of property at different places

An example of this type of blanket cover is should you have a holiday, or second home, you can arrange to extend the cover for your home insurance to cover both properties under a blanket policy, irrespective of the location of the properties.

Fleet insurance – a blanket policy for cars

A business owner may own a fleet of cars and instead of insuring each car individually he can take out fleet insurance. This insurance will cover all cars forming part of the fleet under the same policy.

The use of blanket policies in property, such as sectional title buildings

When you buy a property unit in a sectional title building it is the responsibility of the body corporate trustees to ensure that insurance is taken out on all the common areas, this will include the buildings. This is done through taking out a blanket policy; the body corporate will include your part of the premium in the monthly levies you will have to pay when buying into sectional title property.

Just remember that the blanket insurance will not cover the content of your unit or flat, that is still your own responsibility. Also, check with the body corporate that your individual unit is adequately insured.

Blanket insurance as used in business

In business blanket insurance is used in a number of ways. One example is Employee Dishonesty cover to protect the business against losses caused by the dishonesty of any of the employees. Public liability cover is another form of blanket insurance taken out by business owners or individuals alike.

COID insurance to protect all workers

The Compensation for Occupational Injuries and Diseases Act of 1993 (COID) was previously called the Workmen’s Compensation Act. This is a type of blanket insurance that must be taken out by all employers. The aim of the legislation is to protect employers from employees being able to sue them (there are some exceptions to this rule.)

Blanket insurance is a specialized field

Due to the very nature of blanket insurance it has become a specialized field and is not offered by all insurers. In blanket insurance there will always be the possibility that the total sum insured is not a fair representation of the total value of the individual properties making up the risk. Blanket insurance is therefore very expensive.

Currently, due to the huge cost of blanket insurance, businesses worldwide is concentrating more on strategic risk management and thereby reducing their reliance on blanket insurance.

Your personal insurance blanket

To conclude, as a baby outgrows his first blanket, we need to ensure that our personal, and/or business insurance blanket is always big enough to provide sufficient cover.