Scheduled, blanket, and the clause that sits between them
A scheduled property policy assigns a specific limit to each location. If a location's true replacement cost turns out to be higher than the number on the schedule, the extra is uninsured, and it does not matter that limits at your other locations went untouched. Every location is its own small policy.
A blanket limit removes the internal walls. One limit applies across all locations, so an underestimate at one site is absorbed by the capacity notionally allocated to the others. That is the whole value proposition, and it is real: statements of values are almost always wrong somewhere, because construction costs move faster than the spreadsheet does.
Underwriters responded by adding the margin clause, an endorsement limiting recovery at any one location to a stated percentage — commonly 110% or 115% — of the value reported for that location. The blanket limit still floats, but not far. A margin clause converts a blanket policy into something closer to a schedule with a built-in cushion, and it makes the accuracy of your statement of values matter again, because the cap is a multiple of what you reported rather than of what the building actually cost.
So there are three structures in play, and this calculator settles one loss under each so you can see where they diverge. Property is only half a loss: model the earnings side with the business interruption coverage calculator, and the coinsurance mechanics that apply to both with the insurance-to-value calculator.
Three caps, and which one binds
Recovery under a blanket form with a margin clause is the smallest of three numbers: the loss itself, the blanket limit, and the margin cap. Which one binds tells you what to fix.
If the loss binds, the programme worked. If the blanket limit binds, you have bought too little total limit relative to your values, and the fix is more limit. If the margin cap binds — which is the common case — the fix is not more limit at all. The fix is a more accurate statement of values, because the cap is m × reported value and the only variable you control in it is the value you report.
That is worth stating plainly because buyers reliably respond to a margin-clause shortfall by asking for a larger blanket limit, which does nothing. A location reported at $4,000,000 under a 110% margin clause recovers at most $4,400,000 whether the blanket limit is $8,000,000 or $80,000,000.
The scheduled comparison is simpler: min(loss, scheduled limit at that location). The advantage of blanket over scheduled is therefore concentrated entirely in the locations where the scheduled limit is below the reported value — the schedule shortfall the calculator reports. Where every location is scheduled at or above its own value and the margin clause is at least 100%, the two structures pay identically on a single loss, and the blanket form is buying you protection against valuation error rather than against the loss.
One warning about total insurable value. Blanket policies normally carry a coinsurance or values-reporting condition tested against total values, so a blanket limit set well below TIV can trigger a proportional penalty on any loss, however small. Compare the blanket-limit-as-percentage-of-TIV output against the coinsurance percentage on your declarations page.
Worked example: three locations, $8,000,000 of values
A business reports three locations: $4,000,000, $2,500,000 and $1,500,000, for a total insurable value of $8,000,000. Its scheduled limits are $3,500,000, $2,500,000 and $1,500,000 — the first location is scheduled $500,000 below its own reported value, the other two are exact. The blanket alternative offers $8,000,000 with a 110% margin clause. A fire destroys $4,000,000 of property at location 1.
- Scheduled recovery. min($4,000,000, $3,500,000) = $3,500,000. The $500,000 shortfall is uninsured, even though $4,000,000 of scheduled limit sits unused at the other two sites.
- Margin cap. 110% × $4,000,000 reported = $4,400,000.
- Blanket recovery. min($4,000,000 loss, $8,000,000 limit, $4,400,000 cap) = $4,000,000. The loss binds, so the policy pays in full.
- Blanket advantage. $4,000,000 − $3,500,000 = $500,000, exactly the schedule shortfall at that location.
Now suppose the statement of values was wrong and the true loss is $5,000,000 rather than $4,000,000. With the 110% clause, the cap is still 110% of the reported $4,000,000, so recovery is $4,400,000 and $600,000 is uninsured. Tighten the clause to 100% and recovery falls to $4,000,000, leaving $1,000,000 uninsured. Remove the clause entirely and the full $5,000,000 is paid, because only the $8,000,000 blanket limit applies. Same policy limit, same loss, three different answers — and the difference between them is entirely a function of one endorsement and the accuracy of one line on a spreadsheet.
How to read the result
Start with the schedule shortfall. It is the sum, across every location, of the amount by which reported value exceeds the scheduled limit, and it is the total exposure that blanket coverage removes. If that number is zero, blanket coverage buys you nothing on a single-location loss and you should be paying very little for it.
Then look at whether the margin cap or the blanket limit produced the blanket recovery. The calculator says which in its notes. A margin cap that binds is a signal to re-appraise, not to buy limit.
The blanket-limit-to-TIV percentage is a compliance check rather than a coverage check. At 100% you are reporting full values against full limit. Below that, read your coinsurance condition carefully, since blanket forms commonly require 90% or 100% and apply a proportional penalty when the condition is not met — a penalty that reduces every claim, not only the large ones.
Finally, notice what the model cannot see. A single event striking two adjacent locations consumes blanket limit twice from the same pot, and a hurricane or flood covering a whole region can involve every location you own. The blanket structure's real weakness is correlated loss, and the margin clause is the underwriter's defence against exactly that. If your locations are geographically clustered, the honest test is not the single-location scenario on this page but the sum of the values inside one catastrophe footprint.
How the margin clause percentage changes recovery
| Loss at the location | No margin clause | 100% margin | 110% margin | 125% margin |
|---|---|---|---|---|
| $2,000,000 | $2,000,000 | $2,000,000 | $2,000,000 | $2,000,000 |
| $4,000,000 | $4,000,000 | $4,000,000 | $4,000,000 | $4,000,000 |
| $4,500,000 | $4,500,000 | $4,000,000 | $4,400,000 | $4,500,000 |
| $5,000,000 | $5,000,000 | $4,000,000 | $4,400,000 | $5,000,000 |
| $6,000,000 | $6,000,000 | $4,000,000 | $4,400,000 | $5,000,000 |
| $9,000,000 | $8,000,000 | $4,000,000 | $4,400,000 | $5,000,000 |
Each cell is min(loss, $8,000,000 blanket limit, margin % × $4,000,000), the same expression the calculator evaluates. Every column is identical until the loss exceeds the reported value — which is precisely the case a margin clause exists to control, and precisely the case a statement of values is most likely to be wrong about.
The forms behind this arithmetic
Commercial property in the United States is most often written on the ISO CP 00 10 Building and Personal Property Coverage Form, with the causes of loss and the valuation basis added by separate forms. Blanket coverage is created by how the limits are shown on the declarations rather than by a separate coverage form, and the margin clause is added by endorsement — ISO publishes one titled Limitation on Loss Settlement — Blanket Insurance (Margin Clause), and many carriers use proprietary versions with different percentages and different triggers. Read the endorsement itself rather than relying on the percentage quoted in the proposal, because some versions apply the cap to building and contents separately rather than to the location as a whole.
What this model does not account for
- One loss at one location. A single event affecting several locations draws on the same blanket limit repeatedly, and that is the scenario where a blanket programme is most likely to fall short.
- Deductibles. Per-occurrence and percentage deductibles come off before any of this arithmetic and can be substantial on wind and earthquake coverage.
- Sublimits. Flood, earthquake, ordinance or law, debris removal and equipment breakdown are commonly sublimited well below the blanket limit.
- Valuation basis. Recovery on an actual cash value basis is depreciated, so a replacement-cost statement of values overstates what an ACV policy will pay. Check which basis appears on the declarations before trusting the reported values.
- Coinsurance. The proportional penalty for underreporting total values is separate from the margin clause and can apply on top of it.
- Ordinance and law. Rebuilding to current code can cost materially more than reproducing what was there, and that excess is covered only if the ordinance or law extension is purchased.
Getting the statement of values right is the whole game
Every structure on this page reduces to the accuracy of the values you report. A schedule caps you at what you reported; a margin clause caps you at a multiple of what you reported; a coinsurance condition penalises you against what you should have reported. There is no policy structure that rescues a bad statement of values, which is why an appraisal or a construction-cost index update is usually the highest-return spend in a property programme.
Two habits do most of the work. Update values annually using a published construction cost index rather than a flat percentage, and re-appraise any location that has been renovated, extended or re-equipped. Then compare the reported figure against what the building would actually cost to replace at today's labour and material prices in that specific market — not against the purchase price, the depreciated book value, or the assessed value for property tax, all of which are systematically lower and all of which get used by mistake.
Once values are right, the structural questions become straightforward. If your schedule shortfall is large, blanket coverage is worth buying. If a margin clause is imposed, negotiate the percentage and check whether it applies per location or per building. And if your locations sit inside one catastrophe footprint, size the blanket limit against the values in that footprint rather than against the largest single location. The same discipline applies across the rest of a commercial programme — see the cyber liability coverage limit calculator and the professional liability limit calculator for the equivalent exercise on the non-property lines.