What Are Insurance Policy Riders?

Imagine you’ve just inherited your great-grandmother’s diamond engagement ring—an art deco treasure holding the original stone and decorated with a beautiful handmade filigree. With a standard homeowners insurance policy, chances are you don’t have enough coverage for the cash value of the ring. That’s because many basic homeowners policies have a $1,000 limit on jewelry.  

Fortunately, you can get an insurance policy rider to cover its full value, once it’s been properly appraised. 

Riders give policyholders a way to customize their life, homeowners and automobile insurance base policies, often at minimal additional expense. These riders, sometimes known as insurance endorsements, can provide a less expensive option compared to additional stand-alone policy.  

Riders can also apply to specific conditions, such as the need for home business coverage or increased coverage limits. In some cases, they also exclude certain claims, such as canine liability, which relates to injuries or property damage caused by dogs.* 

Popular Life Insurance Riders 

• Accidental death and dismemberment benefit (also referred to as accidental death benefit or accidental death rider) is the most common death benefit rider on a life insurance policy. It pays money beyond the regular death benefit to cover sudden accidental death. It also covers accidental dismemberment and loss of sight, among other conditions.

• An accelerated death benefit rider helps you and loved ones cover expenses related to terminal illness. You can use funds from your policy’s death benefits while still living to pay expenses such as medical bills. Any deductions, though, will reduce the amount of death benefits passed to your heirs.

• A term conversion rider allows you to convert a term life insurance policy, which typically covers a specific number of years, to a permanent life insurance product later without the need for a medical exam. Young parents often choose this extra coverage rider to protect their family’s future assets and set up their beneficiaries. 

Popular Homeowners Insurance Riders 

Scheduled personal property coverage is available at an additional cost. This covers expensive pieces of jewelry (like your great-grandmother’s engagement ring) for a higher amount than a standard insurance policy. Other popular items for this type of additional insurance coverage include art and antiques, silverware and furs, and handwoven rugs. 

Business property coverage provides additional coverage if you run a business out of your home by covering the costs associated with replacing business equipment and products in case of loss or damage. 

Identity theft restoration coverage can reimburse you for expenses resulting from stolen identity, including legal fees and the guidance of a credit repair counselor. 

Popular optional coverage for automobile insurance** 

• Accident forgiveness is an add-on that protects you from insurance rate hikes the first time you’re responsible for causing an accident. 
• New car replacement coverage is optional insurance that will replace your late model car with the most recent model if your vehicle is damaged beyond repair in an accident. 
• Rental car reimbursement is an extra benefit that will normally cover most of the cost of a rental car while your own car is in the shop due to an accident. 

There are many other riders and additional coverage options available. Like all insurance products, these riders and optional coverage policies can offer you peace of mind. Most come with the expense of an additional premium—some even with considerable expense. And there’s always the possibility that these costs can rise over time. 

Still, read your basic insurance policy carefully. You may find you already have the coverage amount you need and can sidestep purchasing additional benefits from the insurance company.  

*The canine liability exclusion exempts the insurer from any liability from injuries or property damage caused by your dog, although this provision can also appear in the basic contract. 

**Automobile insurance uses the term “optional coverage” as opposed to “riders” to describe add-on insurance products.