An insurance rider or endorsement is an optional add-on that can increase coverage limits or add protection.
Home insurance covers your belongings, but there are limitations on how much your insurance company will pay for certain valuable items if they are damaged or stolen. Home insurance riders can help with that. Here's how they work and when you need one.
Our comprehensive guide includes:
What is an insurance rider?
An insurance rider — also known as an endorsement — modifies the coverage in an insurance policy. For instance, a jewelry rider in a homeowners insurance policy can raise the amount the insurance company will reimburse you if your jewelry is stolen or damaged.
Floaters are similar to riders and endorsements, but they vary in one important way: floaters apply to individual items, while riders and endorsements apply to a category of items. So, a jewelry endorsement may raise the total amount of money an insurance company will pay if your jewelry is stolen, but a floater only applies to individual pieces of jewelry.
Do you need a rider?
Whether or not you need a rider depends on two factors: 1) the value of your belongings and 2) your amount of personal property protection. If your insurance policy limits are lower than the value of your belongings, you should consider adding a rider.
Personal property protection in many home insurance policies is usually 50 to 70 percent of your dwelling limit, which is how much your home is insured for. For example, an insurance policy covering a home up to a $200,000 limit could cover your belongings up to $140,000. You should make a home inventory list, which can help you get a sense of how much protection you need. Once you start an inventory, you may notice just how many valuable items you have in your home.
Common personal property limits
Personal property insurance protects your belongings, including your clothes, furniture and electronics. However, many items are subject to category limits. Standard insurance may not reimburse you for the full value of an item after a loss. Here are example payout limits in a homeowners insurance policy, although yours may be different.
| Item category | Limit |
|---|---|
| Watercrafts | $1,000 or 10 percent of the home's insured value |
| Jewelry, watches, furs and precious or semiprecious stones | $1,500 |
| Theft of silverware, goldware, flatware and tea sets | $2,500 |
| Theft of firearms | $2,500 |
If any category of your belongings exceeds the limit in your policy, you should consider a rider or a floater to be fully covered.
Common homeowners insurance riders
Jewelry is a common home insurance rider, but there are many items worthy of an endorsement or a floater. Here are some common items that you may want to take extra care to protect, as they can easily exceed your policy limits:
- Jewelry, watches and furs
- Antiques and art
- Firearms
- Valuable rugs
- Bicycles
- Camera equipment
- Stamp collections
For many of these items, you can also purchase insurance policies separate from your home insurance, like jewelry insurance or fine art insurance.
External backup
A standard home insurance policy doesn’t cover water backups from external drains and sewer systems. However, you can add a water backup rider to your home insurance.
Extended replacement cost
Extended replacement cost coverage can provide additional protection if the cost of rebuilding your home is more than the estimated replacement cost. Extended replacement cost coverage can increase your dwelling coverage limit by a percentage, such as 20% or 25%. Insurance companies may offer the coverage as either an endorsement or a policy feature.
Sinkholes
Home insurance policies typically exclude earth movement, which includes sinkholes. Many insurance companies offer sinkhole coverage as an endorsement or a standalone policy.
Identity theft protection
Identity theft protection can help you pay costs that result from identity theft. Identity theft protection doesn't usually recover money lost due to identity theft, but it can help get your life back on track after experiencing identity theft.
After a loss: replacement cost vs. actual cash value
Your insurance company will reimburse you in one of two ways after your claim is approved: actual cash value or replacement cost. With standard homeowners insurance policies, personal property is reimbursed at actual cash value. You can upgrade your policy to replacement cost coverage, but it will be more expensive.
Actual cash value pays out based on the value of an item at the time of loss, including depreciation. Replacement cost, on the other hand, reimburses you for the amount required to replace the item. So, if you lose your couch in a fire, you’ll be compensated based on how much it costs to purchase a new couch.
Will a rider increase your premium?
Adding a rider to your policy will most likely increase your insurance premium. However, the increase will probably be small relative to how much you would have to pay to replace your valuables. The last thing you want is to suffer a loss and then find out that one of your valuables was underinsured.
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