Blanket and Other Policies Covering Multiple Properties

Guidance

A blanket policy includes

• blanket policies,
• blanket programs,
• first loss limit policies,
• first loss policies,
• layered programs,
• master policies,
• master programs,
• property programs,
• pooled insurance,
• pooled programs,
• shared limit policies, and
• similar programs insuring multiple locations under the same insurance policy.

Blanket policies are acceptable as long as

• all other requirements are met, and
• the Terms and Conditions endorsement does not reduce, limit, or exclude any required coverage.

When evaluating a blanket policy or multiple property policies, you should consider the following:

• Are the required coverages adequate for the subject property or properties?
• If the blanket policy limits are less than 100% of the total insurable value of the covered properties, is the shortfall warranted by high policy limits and geographic dispersion?
• If the blanket policy covers high catastrophic exposure in a geographically concentrated area, is the limit adequate for the exposure, or should the BorrowerBorrowerPerson who is the obligor per the Note. obtain additional coverage?

Programs insuring properties that are not under common ownership with the BorrowerBorrowerPerson who is the obligor per the Note. or a Key PrincipalKey PrincipalPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. , PrincipalPrincipalPerson who owns or controls specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals, and Guarantors. , or AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of the BorrowerBorrowerPerson who is the obligor per the Note. , or managed by the same property management company may provide evidence of insurance that appears to be a standard layered program. 

You should look for red flags signaling that a program may not be a standard layered program, such as:

• a significant savings in premium when a BorrowerBorrowerPerson who is the obligor per the Note. adds the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). to an existing policy; or
• a large, rounded coverage limit for property insurance.

You may confirm common ownership through an insurance broker or agent.  If the covered properties are not related by ownership or under the same property management, you are expected to evaluate the insurance administrator, considering factors such as the acceptability of its business practices, possible payment of claim by the administrator, years in business, etc.  This evaluation is in addition to the other analysis expected for blanket policies.