What is an insurance endorsement?
You think carefully about the insurance you choose. But situations change, and suddenly your coverage may not be enough. What do you do in that situation? You may need an insurance endorsement. Endorsements, otherwise known as riders, can make changes to existing policies.
If you’re already sweating over another insurance term to remember, we’ve got you covered. In this article, we’ll do a deep dive into insurance endorsements, including what they are, how they work and what types of endorsements are available.
What is an endorsement in insurance?
You can think of insurance endorsements as edits to your policy. If something happens that causes your plan to no longer fit your needs, an endorsement may be a solution.
Let’s say you recently purchased a very expensive piece of art to display in your home. Your homeowners insurance policy has coverage built in for the things you own, but that coverage has a limit to the value it will reimburse. Something like an expensive piece of art may exceed that limit. But by adding an endorsement to your policy, you can increase your coverage to include the value of your artwork.
How insurance endorsements work
Endorsements make permanent changes to your insurance contract, remaining in place until the contract expires when your policy comes up for renewal. It’s possible to renew your endorsements with the policies they adjust, if you choose to do so.
Endorsements are often used to add coverage to policies. However, they can also make changes to existing coverage, eliminate coverage you don’t need.
Types of insurance endorsements
With all the ways endorsements can change policies, there are different types of endorsements that serve various purposes. Here are some common types of endorsements.
Voluntary endorsement
Voluntary endorsements cover several types of insurance riders, all of which you choose to add to your policy. This can include things like extra protection for your expensive artwork, even if it’s not mandatory. Voluntary endorsements are a very common category of endorsement.
Standard endorsement
Consider the common changes that happen in life; a name change after a wedding or an address change after moving to a new town. Standard endorsements are used for situations like these, plus zoning and tax issues. Earthquake endorsements are also considered standard.
Nonstandard endorsement
Special situations call for special insurance. If you are faced with protecting a highly valuable asset or need some other specialized coverage, a nonstandard endorsement may be a solution. It is recommended to consult your insurance agent and business advisors to determine if this endorsement fits your situation.
Mandatory endorsement
Residents of some areas are required by law to have certain coverage. For people in these situations, mandatory endorsements may be added to their policies to satisfy those requirements.
Types of homeowners insurance endorsements
Homeowners have numerous options when it comes to insurance endorsements. Here are some of the most common.
Service line coverage
A service line endorsement is aimed at providing protection for utility lines, such as water, gas, and electric running to a home.
Water backup coverage
Water backups can be a homeowner’s worst nightmare. If your drains, sump pump or sewer line back up into your home, a water backup endorsement may help pay for repairs resulting from the backup. This may include repairs and replacement of drywall, carpet, flooring as well as mold mitigation service that result from the water backup.
Identity theft coverage
Cybercrime grows more common every year, giving consumers one more threat to worry about. An identity theft endorsement can offer protection for your personal data. While this endorsement helps prevent id theft, it won't make a member whole if they have lost money due to a cyber crime.
Frequently asked questions
Do insurance endorsements have deductibles?
Some endorsements have specific deductibles. Earthquake endorsements typically have deductibles, as do many endorsements for items covered by personal property. Depending on the endorsements you add to your policy, certain damages may be subject to separate deductibles rather than the standard deductible on your base coverage.
How long is an endorsement valid?
Insurance endorsements typically remain active on your policy until the policy expires. They effectively become part of your policy. You can also renew an endorsement with the policy it’s attached to.
If you have questions about your coverage, want to know if you could benefit from an endorsement, you should review your existing policy and/or contact your insurance agent. Don’t have an agent? Find one today!