What’s an Insurance Rider and When Do You Need One?

If you have an auto, home or life insurance policy, you’re covered, right? The answer isn’t quite that simple.

All policies have coverage limits, so if you own items valued above your coverage limits you may be unable to replace them if they are damaged or stolen. There are also certain types of coverage that don’t fall under a standard insurance policy. But don’t fret; you can get just the coverage you need through options called riders and endorsements.

What is an insurance rider or insurance endorsement?

Insurance riders, also called endorsements, are coverage options. They help you tailor your auto, home or life insurance policies to your personal needs, so you get just the right amount of coverage—not too little or too much.

Consider an expensive engagement ring. Most standard homeowners policies have a relatively low jewelry limit of about a thousand dollars. But you can add a rider or endorsement to your homeowners insurance that increases your personal property coverage limit to meet the value of the ring.

Available options vary by state and insurance provider, and those that adjust coverage benefits will likely cause a change in your premium. Here are common riders that you can get with insurance through AAA.

Auto insurance riders

If you’ve ever been in an accident, you know the inconvenience of being without your car while it’s getting repaired. By adding a rental car coverage rider to your auto insurance policy, you won’t have to deal with that inconvenience. It provides payment or reimbursement for rental car expenses if your vehicle is out of service due to a claim.

Other auto insurance riders to consider:

• Enhanced Exterior Repair Option: Allows your vehicle to be repaired, under certain circumstances, with original manufacturer parts.
• Extra Equipment: Rims, sound systems, hitches, roof racks—anything that didn’t come from the factory can be replaced if damaged in an accident.
• Loan/Lease GAP Coverage: Protects you if your car is totaled and you owe more than it’s worth. It pays the difference between the loss payment and the amount owed on your loan or lease.

Homeowners insurance riders

Homeowners insurance covers not only your structure but also your belongings. With insurance through AAA, you can get additional coverage options that include: lock replacement; fire department charges; theft or misplacement of jewelry and furs; damages from extreme heat, humidity and cold; and more.

Other homeowners insurance riders to consider:

• Personal Property Replacement Cost: Your property is not typically covered for replacement cost, but rather its depreciated value. This endorsement insures your personal property for the full replacement or restoration cost.
• Identity Theft Coverage: With identity theft on the rise, you may want to add this endorsement, which covers expenses such as lost income and certified mail fees.
• Sewer, Drain and Sump Water Backup Coverage: Many homeowners policies don’t include coverage if a sewer or drain backs up into your home. This endorsement provides coverage for damage and loss incurred by those backups.
• In-Home Business: If you work from home or operate a home-based business, it’s a good idea to add this coverage. It provides increased liability coverage along with coverage for business property.

Life insurance riders and endorsements

Riders and endorsements on life policies can provide additional coverage and benefits to yourself or family members.

Some life insurance riders and endorsements to consider:

• Accelerated Death Benefit endorsement: Allows you to advance up to 50 percent of your benefits prior to death if you become terminally ill.
• Guaranteed Increase Option Rider: Allows you to purchase additional coverage at designated milestones, such as after marriage or the birth of a child, without a medical exam—meaning you won’t be denied the additional coverage if you have an illness. This is a beneficial rider if you’re young and predisposed to health problems later in life.