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What You Need to Know About Policy Riders or Endorsements

Posted by Parker Beauchamp on Mar 07, 2017

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Riders or endorsements are legally-binding attachments to insurance policies that remove, modify or extend insurance coverage elements. They may be attached to life, health, disability, homeowners and automobile insurance policies.

In this post, we outline several ways you can use riders or endorsements to overcome limits and exclusions in a variety of personal insurance policies.

Life Insurance

Three in five people have invested in some type of standard life insurance policy. Policy riders increase insurance coverage and safeguard you and your family in the case of a health issue or death. A few of the most common life insurance riders include:

  • Accidental Death – This rider, sometimes called Double Indemnity, increases the death benefit from the insured if they die due to an accident.
  • Disability Income – Pays a stated amount, for a defined number of months, if the insured becomes disabled and is unable to work.
  • Child Term – Provides the family benefits if a child passes away before a specified age. Typically this rider is “guaranteed convertible” to a new policy on the child once they reach a certain age.
  • Spousal – This rider provides a set amount of term insurance on the spouse of the main applicant for insurance.
  • Term Conversion – This rider guarantees the issuance of a permanent policy at or before the expiration of a Term Life policy.
  • Guaranteed Insurability (Renewal Provision) – Enables the insured to apply for additional coverage without evidence of insurability should their health decline over time.
  • Accelerated Death Benefit – This rider allows for the payment of a stated amount in the event of a terminal illness, even before the death occurs.
  • Long-Term Care – Provides monthly payments in case the insured’s health compels them to receive ongoing medical care. The benefit is some percentage (selected at application time) of the policy’s death benefit.
  • Waiver of Premium – Waves off future premiums of the insured if they become permanently disabled.

Home Insurance

Many standard home insurance policies limit or exclude coverage for items of high value. Homeowners who want to protect their personal assets should invest in home insurance riders or endorsements to ensure they are completely covered by their policy.

Policy riders can provide additional coverage for items such as fine art, collectable items, jewelry and antiques:

  • Antiques and Artwork Riders – These riders are inexpensive and safeguard paintings or fragile items worth more than $2,000 depending on the insurer.
  • Collectable Item Riders – These riders ensure coverage for collectables such as stamps, coins, memorabilia and the like.
  • Jewelry Riders – These riders cost only a small percentage each year of the appraised value to protect individual pieces of jewelry from damage or theft.
  • Earthquake Coverage – The peril of an earthquake is not automatically included on homeowners policies. The coverage can be added by endorsement, and it can specify whether or not any masonry veneer damage would be covered.
  • Water Backup of Sewers and Drains – This can be offered as an add-on by most carriers, usually purchased in increments of $5,000.
  • Extension of Liability and Medical Payments –These coverages can be added to a rental dwelling or a secondary or vacation home.
  • Increased Coverage – Over the automatic percentage amounts, to apply to “other structures” both on and off the primary residence premises.

Related Resource: Personal Property Insurance

Investing in policy riders or enhanced coverage endorsements is the best way to ensure your family and assets are properly protected as they enable you to control your insurance policy in all life situations. Each insurer prices riders differently, so it’s best to contact an insurance specialist to assist you in determining the optimal coverage for you.

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Topics: Personal Insurance