What is an insurance endorsement?

Also known as a rider, an insurance endorsement generally boosts coverage for an existing insurance policy. The meaning of endorsement in insurance is a policy amendment to either add modified coverage for items or perils that would otherwise be excluded, increase the coverage limits that already exist on the policy, or add exclusions to an already existing policy.

By adding an insurance endorsement, you are effectively changing the terms of your insurance policy. You may be able to add an endorsement when you purchase your original policy, when it’s renewed, or even mid-term if your insurance company allows it (or if you have a qualifying life event that makes you eligible for certain changes). If the endorsement is added later, you’ll receive new policy documents that notate your endorsement, and you’ll be covered by those new limits if and when a loss occurs within your policy coverage period.

Key takeaways

• Endorsements are used to make specific changes to an insurance policy.

• These amendatory endorsements can include expanded coverage, higher coverage limits, added perils that the standard policy wouldn’t otherwise cover, or exclusions.

• Endorsements can be added when the policy is purchased, when it is renewed at the end of the term, or even mid-term in select cases.

How does an insurance endorsement work?

An insurance endorsement, also known as a rider, is a modification that is added to a base insurance policy. It can add coverage, change certain coverage limits, expand the policy to allow for additional perils, or even create coverage exclusions.

Insurance endorsements are a great way to customize your insurance and curate the specific coverage you need without needing to purchase an additional policy. But what are endorsements in insurance commonly used for?

Expanding a homeowners insurance policy to include additional perils

An insurance endorsement example is one that extends a policy’s covered perils.

For instance, many homeowners insurance policies exclude coverage for mold-related damages and even sewer or plumbing backups. Instead, you may be able to add this coverage to your policy through a separate endorsement.

Without an endorsement, damages related to sewer back up will be on you. Or if you were to discover that a slow leak behind your shower had caused mold growth, you’d likely be footing the bill to tear out walls, replace tile, and even hire a mold mitigation specialist.

However, these kinds of damages and subsequent repairs may be covered with a mold coverage or sewer backup rider.

Boosting limits with replacement cost coverage

Many insurance policies include actual cash value coverage by default. This means your covered belongings will be replaced or repaired up to their current depreciated value. That is important because, over time, most items lose value as they are used or grow older, so your insurance coverage may not be enough to repair or replace them fully — instead, you’ll be stuck covering the difference out of your own pocket.

With replacement cost coverage, your policy will provide the full repair or replacement expense after a covered loss. For example, if your 15-year-old roof is destroyed in a storm, replacement cost coverage will pay the full cost of replacing it contingent upon the terms and conditions of your policy. On the other hand, actual cash value coverage would have only paid what the roof was worth when it was damaged.

What are common types of endorsements in homeowners insurance?

The endorsement options available to you will depend not only on the type of homeowners insurance policy you have but also on factors including, but not limited to, the carrier you choose and factors like your location. However, there are some common riders that are available on many policies today. Here are some examples of endorsement in insurance:

• With an extended replacement cost rider, your dwelling coverage is expanded to cover costs above and beyond your standard policy limits. This means that if it costs more to repair or replace your home, especially after a total loss, you won’t have to foot the bill for the difference. There are limits and so you should review your policy to make sure the limit meets your needs.

• A scheduled personal property endorsement helps protect highly valuable items in your home, such as antiques, jewelry, guns, and art. This rider offers higher or additional coverage limits for these specific items and may also provide coverage against additional perils.

• Most homeowners insurance policies exclude damage due to sewer backups into your home, though this can cause significant damage to your home’s structure, flooring, and even your personal belongings. A water backup coverage rider can help pay for water removal, construction costs, and even personal item replacement if sewer or plumbing lines back up into your home after a covered loss.

• Standard homeowners insurance policies generally don’t cover damages due to earthquakes. Even if you don’t live in a fault zone, buying an earthquake insurance endorsement can offer protection for your dwelling, belongings, and even temporary living expenses if your home is damaged due to an earthquake or aftershocks.

Other types of catastrophe insurance may also be available, such as flood insurance, hurricane insurance, and even coverage for wildfires.

Do endorsements in insurance have deductibles?

Yes, your homeowners insurance policy endorsements are subject to a deductible. However, depending on the endorsement(s) you add to your policy, you may find that different deductibles apply to certain damages, separate from the general deductible on your standard policy.

Your insurance deductible is the initial portion of a filed claim that you are responsible for paying out of your own pocket before your carrier steps in to cover the rest. Your general homeowners insurance policy deductible may be a flat dollar amount—often ranging from $500 to $5,000—or a percentage of your home’s insured value (such as 1% or 2%). However, when you add an insurance endorsement to your policy, it often comes with its own specific deductible.

For example, if your home is insured for $650,000 and you have a 1% deductible, you’re responsible for paying the first $6,500 of any claim made against the policy. Your scheduled personal property coverage may have a smaller, flat rate deductible of only $500. If there is a covered loss to a valuable piece of jewelry, for instance, the endorsement’s deductible would apply and you would only be responsible for this lower deductible, not the full $6,500.

On the other hand, your policy could also have a higher deductible for certain catastrophes. Earthquake insurance deductibles, for instance, often range from 2% to as high as 20%. If you’re in an earthquake-prone location, you could wind up with a much higher deductible for claims related to earthquake damages.

How long is an insurance endorsement valid?

An insurance endorsement is valid for the duration of the policy term or until you take it off (if you can). Whether you add your endorsements at the same time you buy or renew your policy or add them mid-term when your policy is active, you’ll have this coverage for as long as the policy remains in effect.

Endorsements will be included in your policy documents, specifying the coverage term. As long as that term lasts, you’ll be protected by the coverage listed, including the base policy and any added riders.

Do I need an insurance endorsement in my policy?

This depends on you and your coverage needs. An endorsement, or rider, can be a great addition to any homeowners insurance policy. This added coverage is usually available at a lower cost than purchasing an entirely separate policy, yet it can expand your coverage.

Insurance endorsements are a great way to customize your homeowners policy and fill in any gaps in coverage. Most policies, for example, exclude perils such as mold damage, sewage backups, or flooding. By adding an endorsement, though, your property will also be protected against these types of losses, and you’ll have peace of mind.

Still have questions?

Want to know more about homeowners insurance endorsements? Here are the answers to some frequently asked questions.

What is the difference between an endorsement and a rider?

An insurance endorsement is the same as a rider, and the two terms are often used interchangeably. These coverage add-ons can also be known as floaters.

What is an insurance endorsement page?

An insurance endorsement page is an addendum to your basic policy documents, explaining the rider(s) that have been added and exactly what coverage is offered.

What is an endorsement premium on homeowners insurance?

Adding an endorsement or rider to a homeowners insurance policy typically comes at an increased cost, on top of the price of the base policy. An endorsement premium (or endorsement fee) is the added amount paid for this optional coverage.

What is an endorsement of an insurance clause?

An endorsement clause is used to modify an insurance policy to either add, expand, change, or even delete certain coverages. These endorsements, also known as riders, can typically be added when the policy is purchased or renewed but may also be available mid-term in some cases.

What is an additional insured endorsement?

An additional insured party is an individual who has an interest in the risk insured and to whom the benefits and coverage of that policy are extended. With a homeowners insurance policy, additional insured endorsements are at times used to add coverage for unmarried partners, roommates, or even landlords (on an HO-4 renters policy, for example).