# How to Allocate an Insurance Premium Across Multiple Properties

Source: https://www.creshield.com/resources/allocate-insurance-premium-across-properties
By Brad Cottam, CRE Shield (licensed in Kansas and Texas). Updated 2026-10-28.

To allocate a blanket policy premium across properties, start with the carrier's rating by location if you can get it. If you cannot, split by each building's insured value, then adjust for the risk factors that drive each building's rate. Do not split evenly. An even split overcharges low-risk buildings, undercharges high-risk ones, and is the first thing a careful tenant will question. Whatever method you use, write it down, apply it the same way every year, and make sure the lease lets you do it.

## Why an even split fails

A 6,000 square foot masonry building in a low-hail inland market and a 6,000 square foot building in a hail-prone area with an older roof do not cost the same to insure. Divide the premium evenly and the first tenant pays for the second. If those tenants compare notes, you have a dispute. See [the blanket policy problem](/resources/blanket-policy-per-property-cost).

## Four ways to allocate

| Method | How it works | Good for | Weakness |
|---|---|---|---|
| **Equal split** | Premium divided by number of buildings | Nothing, except identical buildings | Ignores value and risk |
| **Square footage** | Premium divided by each building's share of total square feet | A rough check | Ignores value, location and roof |
| **Insured value (TIV)** | Each building's share of total insured replacement cost | A reasonable default | Ignores differences in rate by location and construction |
| **Rated premium by location** | The carrier's own premium for each location | The most defensible | Needs the carrier's rating worksheet |

## A worked example (illustrative numbers)

Three buildings share one blanket property premium of **$48,000**.

| Building | Insured value | Equal split | By insured value | By rated premium |
|---|---|---|---|---|
| A: inland, newer roof | $1,200,000 | $16,000 | $14,400 | $11,900 |
| B: inland, small | $800,000 | $16,000 | $9,600 | $8,800 |
| C: hail zone, older roof | $2,000,000 | $16,000 | $24,000 | $27,300 |
| **Total** | **$4,000,000** | **$48,000** | **$48,000** | **$48,000** |

Insured value gets closer than an equal split. The carrier's rated premium is closest to what each building actually costs: building C carries more of the premium because of its location and roof. All three methods add up to the same total. The difference is who pays which share.

## How to get a rated allocation

Ask your agent for the carrier's **premium by location**, or for a written allocation that starts from insured value and adjusts for the factors that drive the rate: wind and hail exposure, construction, roof age, protection class and loss history. See [roof age](/resources/roof-age-commercial-insurance) and [replacement cost vs actual cash value](/resources/replacement-cost-vs-acv).

## Allocating other pieces

- **Liability premium.** Often allocated by location count or square footage, or by the carrier's rating by location.
- **Taxes, fees and surcharges.** Allocate in proportion to the premium they attach to.
- **Terrorism, equipment breakdown and other add-ons.** Follow the coverage: if only some buildings have it, charge only those buildings.
- **Umbrella.** Often the owner's own cost, unless the lease allows recovery.
- **Mid-term changes.** Pro-rate by days when a building is added or removed.

## Make it defensible

1. **Check the lease.** Does it allow "equitable" or "reasonable" allocation? Does it require a specific method?
2. **Document the method** in one page and apply it to every property the same way.
3. **Keep backup:** the carrier's schedule, the rating worksheet, and your calculation.
4. **Share it with tenants** who ask, along with the policy documents the lease entitles them to.
5. **Reconcile** estimates against actual at renewal. See [policy year vs lease year](/resources/policy-year-vs-lease-year-insurance-billing).

## FAQ

### What is the fairest way to split a blanket policy?
The carrier's rated premium by location is the most accurate. Insured value is a sound fallback.

### Can I use square footage?
It is a rough check. It ignores replacement cost and location risk, so it can over- or under-charge.

### Do I need the tenant's consent to allocate this way?
Not if the lease gives you the right. If the lease is silent or unclear, get advice and consider writing the method into the next amendment.

### What if a building is added mid-year?
Add it to the schedule from its effective date and pro-rate the premium by days.

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*This article is general education, not insurance or legal advice. The numbers above are illustrative only. Lease terms and rating vary. CRE Shield is licensed in Kansas and Texas and transacts insurance only in states where it is licensed.*