A blanket property insurance policy covers different types of property at one or more locations and does not specify the valuation of the items protected under the blanket, but instead allocates an overall limit to the policy, upon which premiums are based.
The expression “blanket policy” is a term of art in the field of insurance. It appears to be most frequently used in connection with fire insurance policies and has acquired a rather precise connotation. A blanket policy is said to be one which contemplates the risk of shifting, fluctuating or varying, and is applied to a class of property rather than to any particular risk or thing…. A compound or blanket policy invariably covers and attaches to every item of property described in the policy and insures the property collectively, without providing in the event of loss for a distribution of the insurance to each item.
Nat’l Bank v. Fidelity and Casualty Co., 125 F.2d 920, 924 (4th Cir. 1942).
Lawyers, insurance adjusters, and public insurance adjusters often must determine whether one, or multiple deductibles apply where an event causes damage at several locations insured under the blanket policy. The proper application of deductible(s) usually depends on the policy definition of “occurrence,” if any, and the policy provisions specifically addressing deductibles.
“Occurrence” is not often defined in property insurance policies. The few examples available include a binder which defines “loss arising out of one Occurrence” as “the sum total of all loss or damage insured against arising out of or caused by one event.” See World Trade Ctr. Properties, L.L.C. v. Hartford Fire Ins. Co., 345 F.3d 154, 185 (2d Cir. 2003) abrogated on other grounds by Wachovia Bank v. Schmidt, 546 U.S. 303, 126 S. Ct. 941, 163 L. Ed. 2d 797 (2006).
Alternatively, Allianz Insurance, in a policy issued before September 11, 2001, defined occurrence as, “any one loss, disaster or casualty, or series of losses, disasters or casualties arising out of one event.” Id. However, these cases may or may not be persuasive to a judge if your policy contains no definition of “occurrence.”
Fortunately, other policy provisions often make clear how many deductibles may apply. Couch on Insurance § 178:2, provides examples where the policy language dictated whether one, or multiples deductibles may be assessed to the policyholder.
Under a deductible clause, a deduction for “each collision or upset” contemplates one deduction for each accident giving rise to a cause of action on the policy. [Motors Ins. Corp. v. Smith, 218 Miss. 268, 67 So. 2d 294 (1953)].
Under the following circumstances, only one deductible was necessary—
. . .
[Where the first impact was proximate cause of subsequent damage, the collision insurer of driver of second car was obligated to cover all of insured’s damage, less only one deductible. Hillman v. U.S. Liability Ins. Co., 59 N.C. App. 145, 296 S.E.2d 302 (1982)].
In contrast, the insurer has been held entitled to multiple deductibles under the following circumstances: Two fires at two different places with two separate causal factors, regardless of whether they were set by one individual or different individuals or groups of individuals. [See Goose Creek Consol. I.S.D. v. Continental Cas. Co., 658 S.W.2d 338, 14 Ed. Law Rep. 223 ( Tex. App. Houston 1st Dist. 1983).]
Couch § 178:2
In some cases, courts rely on policy language referring back to the policy declarations pages. The policy language below is an example:
We will not pay for loss or damage in any one occurrence until the amount of loss or damage exceeds the Deductible shown in Declarations. We will then pay the amount of loss or damage in excess of the Deductible up to the applicable Limit of Insurance.
Every policy is different and each claim requires an analysis of the applicable provisions. Careful review of the declarations page and descriptions of the deductible in the policy will help ensure the policyholder has not been overcharged.