Question on section 2

Question on section 2

by Rachel Breanna Macklin -
Number of replies: 3

Specific vs. Blanket Insurance:

Property coverage may be written on a specific basis meaning each building, its contents, its indirect exposure as well as any other individual coverage are shown on the policy with their own limit. Coverage may also be written on a blanket basis. Under the blanket insurance, a single amount ofinsurance may apply to two or more buildings or to two or more coverages (buildings and contents).Blanket coverage is frequently used when the insured has more than one building and the contents are frequently moved from building to building. If the insured had $30,000 contents in each of three buildings with a total blanket limit of insurance of $90,000, he will have full coverage for a loss if at the time of a loss $60,000 of contents were in one of the buildings.

 

Question:

Refering to the last sentence of this paragraph, how would the insured have full coverage if at the time of a loss $60,000 of contents were in one building? If there are three buildings, and each building has $30,000 of contents, wouldn't his total be $90,000 of contents?

 

Thank you in advance!

In reply to Rachel Breanna Macklin

Re: Question on section 2

by Jean Pierre Aviles -
You're reading it as if each building had only 30,000 coverage limit.. Then it wouldn't be blanket. It would be specific. Blanket is a limit applied for all of the buildings together. Specific limit could apply to only one building. So since he has blanket .. 30 x 3 = 90,000 coverage for all. 90,000 coverage covers a 60,000 dollar loss If it was specific limit and the building only had 30.000 limit A 60,000 loss would only be covered for 30 grand. (If I'm not mistaken.)
In reply to Jean Pierre Aviles

Re: Question on section 2

by Rachel Breanna Macklin -

Ok... I understand what you are saying. Is this where the equation: loss X limit of insurance  divided by value of property times coinsurance percentage would apply?

I feel as though this was thrown into the section wtih no explanation as to why the coverage limit would be $60,000...

In reply to Rachel Breanna Macklin

Re: Question on section 2

by Sarah Beall -

I think that "coverage limit" may an incorrect/confusing term in this case... his coverage limit should be $90,000 for all buildings and contents (all 3 buildings 'blanketed' together), but the loss was only for $60,000.  Therefore he was fully covered for, not limited to, $60,000.  He would not receive $90,000 for a $60,000 loss, but he could receive up to $90,000 IF he suffered a $90,000 loss, whether in one building or more.

Jean is correct that if the buildings had separate limits, then even if the insured had stored $60,000 of contents in one building, said building only has a coverage limit for $30,000, therefore he would only receive $30,000 for a $60,000 loss.

If I am incorrect in this, PLEASE let me know, as I am taking the final soon :)

I am basing my answer off of the info. from the state manual, pg.35.