A blanket limit is a total maximum amount the insurer will pay for all covered losses within a defined class, contract block, or territory.
Underwriting Logic
Underwriters set blanket limits to control accumulation exposure. Instead of separate per-exposure caps, they apply one cap that can absorb multiple claims across many insured units. Premiums are then adjusted based on concentration, volatility, and aggregate expected loss.
Claims Impact
For claims teams, blanket limits require careful allocation. The first major loss uses part of the limit, and remaining losses across the covered block are reduced by that payment. This is why policy wording must specify whether the limit is per policy year, per program, or per type of peril.
Example
A chain with 20 locations insures all properties under one industrial property policy with one blanket limit. A storm claim at one location reduces the same total limit available for storms at all other locations that year.