What is the difference between a blanket and scheduled insurance policy for apartment portfolios?
A blanket policy covers multiple properties under a single limit, allowing the full limit to apply to any one location. A scheduled policy lists each property with its own separate limit.
Apartment owners with multiple properties must choose between blanket and scheduled policy structures, and the decision significantly affects both coverage flexibility and cost. A scheduled policy lists each property individually with its own coverage limit. If Property A is scheduled at $5,000,000 and suffers a $6,000,000 loss, the payout is capped at $5,000,000 regardless of coverage available at other locations.
A blanket policy covers all listed properties under a single aggregate limit. If the blanket limit is $25,000,000 across five properties, the full $25,000,000 is available for a loss at any single location. This structure provides significantly more flexibility and protection against catastrophic losses at any one property. The ISO Commercial Property Conditions form (CP 00 90) and blanket endorsements (CP 00 30 and CP 00 40) govern how blanket coverage operates.
Fannie Mae's Multifamily Selling and Servicing Guide permits blanket policies for portfolios but requires that the total blanket limit be sufficient to cover the replacement cost of all properties combined, with no coinsurance or an agreed amount endorsement. Freddie Mac's Seller/Servicer Guide contains similar provisions. CMBS loans are more restrictive and often require property-specific scheduled coverage to ensure each securitized asset has its own dedicated limit.
Blanket policies typically cost 5% to 15% less than the equivalent scheduled coverage because the insurer benefits from geographic diversification across the portfolio. However, the portfolio must be large enough (typically four or more properties) for most insurers to offer a blanket structure.