An insurance endorsement, also known as a rider, is a change in your insurance policy that modifies the scope or terms of the original policy. Adding an endorsement usually means you are adding to or changing the coverage. For example, if you purchase additional coverage to bulk up your insurance protection, it will be called an endorsement.
Let’s talk more about how they work and what they are in detail.
Definition of Insurance Endorsements
An endorsement can be used to delete, add, modify, exclude, or alter coverage. It can be done when the policy is signed, at the time of renewal, or while the policy is active. The change is legally binding. For example, you can choose to add an insurance endorsement to expensive art or jewelry that your standard homeowner’s insurance policy would not cover.
How Does It Work?
When you get an endorsement, your premiums can change as a result. They are often used on life and health insurance or casualty and property policies. They remain valid until your base policy is valid and renewed under the same terms and conditions as your original policy. The only difference is that an endorsement clearly states that it is being done for a specific timeframe.
Riders can mean additional paperwork to your policy, or they can also replace your original policy. Usually, it is done by way of an add-on since only additional terms and conditions are added. In this case, the papers should be kept with the original policy.
If you receive your documents of the endorsements policy, you should always compare it to your original one to see what has changed. You should then talk to your policy representative to make sure you understand the entire process and the changes.
What Can I Endorse?
Endorsements can be quite useful and cater to a wide variety of needs. One partner can request a rider to remove an ex-partner from a home policy when they are splitting up, and the remaining partner will receive new documents showing them as the sole owner.
Another common example of a homeowner’s policy is including specific endorsements for high-value items such as art, jewelry, and other collectibles whose values exceed the coverage in a standard policy. In this case, these specific items may have riders that correctly reflect their cost so they can be insured. It will increase the premium amount.
Endorsements can also reduce or limit coverage. A homeowner’s policy can have a rider that excludes specific instances of water damage.
The bottom line is that you may need an endorsement if there are significant changes in your life that affect your insurance needs. Whether it is acquiring high-value items or a change in policyholders' names, it is best to review your policies before renewal to ensure that your current needs are met. Your insurance policy representative can help you to determine whether you need a different type of policy or whether you need an endorsement.
How Are Different Endorsements Structured?
Mandatory Vs. Voluntary Endorsements
Mandatory endorsements are not very common and refer to something that cannot be avoided. This happens when there is a state law that requires this particular change.
Voluntary endorsements are common and are not mandatory.
Standard Vs. Non-Standard Endorsements
Standard Vs. Non-Standard Endorsements
Non-standard endorsements either change the original policy’s structure or create something new altogether.
Types Of Endorsements
There are too many endorsements to list here, but these are some of the most common ones
Scheduled Personal Property Endorsement
This endorsement adds coverage to high-value items. Your coverage increases, and so does your premium, but it will help keep your valuables safe in case of theft or damage.
Most common homeowner’s policies do not cover flooding damage. If you live in an area that has frequent floods, adding this endorsement can help you. There are some areas that even require you to get flood endorsement.
Water/Sewer Backup Endorsement
Water damage can be costly, especially if the issue results in additional problems such as mildew or mold. If your sewage or water pipes overflow and cause damage to your property, this type of endorsement can help you reimburse the costs.
Other types of endorsements include - earthquake endorsement, canine liability exclusion endorsement, identity theft endorsement, home business endorsement, additional insured endorsement.
If you want clarification or are having any trouble with your insurance company, Englander Peebles should be your go-to property insurance law firm. We have years of experience in dealing with insurance companies and representing homeowners and their needs. Contact us for an initial free case evaluation so that you can get started right away.