What Options Or “Riders” Are Available?

In addition to the standard coverages provided by most insurance policies, there are options or “riders” which can be added to the policy. A “rider” is an additional set of terms and conditions that “rides on” the basic package offered by the insurance company. Below is a sampling of some of the most common riders that can be added to or purchased along with an insurance policy.

1. Scheduled personal property endorsement (personal property floater)

Most insurance policies limit the coverage that is provided for personal property, especially certain categories of personal property (check with the individual insurance company to determine what categories of personal property it lists with respect to limitation of coverage). For example, most policies limit the loss of money to $100 – this is to prevent insureds from claiming a high dollar value loss of money whenever a loss does occur. Jewelry is usually covered up to a certain amount but any individual item is only covered for a stated amount, regardless of actual value.

If you have coin collections, cameras, and jewelry in excess of the stated amount of coverage for these categories, you can add a rider to the insurance policy to cover the additional value of these items. The cost is usually determined on a “per thousand” dollar basis. The cost per thousand is often nominal when compared with the risk of loss. If you have items of high value, make certain that there is no limitation to their coverage. If there is, have the items appraised by a certified appraiser and then get the insurance company to add a rider to cover the additional value of your personal property.

2. Special computer insurance

Your home policy may or may not cover that brand new WebTV you just purchased. Or the scanner, tape drivers and speakers you need for operating your home office. To cover them, your insurance company will probably require you to purchase a rider as additional coverage. You may also need a business policy to cover your home office equipment.

3. Income property

Some insurance companies allow you to add a rider that covers residential premises other than your primary residence. This is most likely to occur if you own your home plus another residence that you rent out. As it is with your primary home, it is important to maintain insurance on rental property. Many insurance companies will let you to add additional properties to your existing homeowner’s insurance.

4. Secondary residence premises endorsement

If you own a vacation home, it is important for you to maintain coverage for that residence as well as your primary residence. Like income property, many insurance companies offer secondary residence (vacation) premises coverage as a rider to your homeowner’s insurance policy. You are often able to obtain the needed additional coverage at a reduced rate by purchasing a rider (as opposed to a separate, stand-alone insurance policy).

5. Theft coverage protection endorsement

Most insurance policies have strict limitations with respect to coverage of personal property loss due to theft. To expand the amount of insurance for personal property due to loss by theft, purchase a rider for additional theft coverage under your homeowner’s or renter’s insurance policy. You should check your current or “about to be purchased” insurance policy to determine the amount and type of coverage it has for loss of personal property due to theft.

6. Home business

Having a home-based business presents a variety of exposures to loss that must be considered. Many homeowner’s or renter’s insurance policies exclude coverage for losses as a result of the operation of a business — including business-related liability (e.g., a customer trips over your furniture and breaks an arm). Many insurance companies now recognize that many people operate home-based businesses. If you operate a business out of your residence, make certain that coverage is available through your insurance policy. If your home-based business is excluded, you may be able to add a rider to the insurance.

7. Watercraft and recreational vehicle endorsement

Many insurance policies exclude coverage for watercraft and other recreational vehicles commonly located (stored) at your residence. In addition, these vehicles are often excluded under standard automobile insurance policies. To obtain coverage for loss of these vehicles, many insurance companies offer an optional rider. Check with your insurer to determine if such coverage is excluded and, if so, whether a rider may be added to the insurance policy to cover these vehicles.

8. Land and mine subsidence coverage

Some areas of the country are susceptible to land slides and land subsidence losses. You may recall images of hillside homes in southern California sliding into muddy ravines. Most insurance policies exclude loss of property due to land subsidence, but some insurance companies provide a policy rider to protect the homeowner against loss due to land subsidence.

Although not common, some areas of the country had extensive mining operations in the past. Loss due to the structural failure of old or abandoned mining operations is often excluded from coverage. If your residence sits on top of a former or current mine operation, check to make certain there is coverage should the mine collapse. If not, see if your insurer offers a rider option.

9. Sewer and drains back-up

Similar to flood (excluded under all homeowner’s or renter’s insurance policies), a backed-up sewer or drain can cause significant damage and may be excluded from coverage by the terms and conditions of the insurance policy. Many insurance companies offer a rider to protect against the risk.

10. Workers’ Compensation

If you have people who come to your residence to do work, you may be viewed as an employer. For example, if you have someone who provides childcare in your home or you have a neighborhood youth mow your lawn once a week, these people may well be your employees (often referred to as “casual” employees). Most states require all employers to have workers’ compensation coverage for their employees. Failure to provide workers’ compensation insurance doesn’t only expose you to severe and catastrophic loss should someone be deemed to be your employee at the time of an accident or injury, but also failure to provide workers’ compensation insurance could result in stiff fines and penalties. Some insurance companies offer a rider to their homeowner’s insurance policies to provide coverage for these “casual” employees.

Case Studies: Exploring Insurance Options

Case Study 1: Scheduled Personal Property Endorsement

Sarah owns valuable jewelry and collectibles that exceed the coverage limits of her standard homeowner’s insurance policy. She decides to add a scheduled personal property endorsement, also known as a personal property floater, to her policy.

This rider allows her to specify the individual items and their corresponding values, ensuring they are adequately covered in the event of loss or damage. By adding this rider, Sarah has the peace of mind knowing that her high-value personal property is protected.

Case Study 2: Home Business Coverage

Mark operates a photography business from his home and realizes that his homeowner’s insurance policy excludes coverage for business-related losses and liability. To safeguard his business, Mark adds a rider to his insurance policy that specifically covers his home-based business activities.

This rider provides coverage for business equipment, inventory, and any potential liability arising from his business operations. With the rider in place, Mark can focus on growing his business without worrying about inadequate insurance coverage.

Case Study 3: Watercraft and Recreational Vehicle Endorsement

Jennifer owns a boat and a recreational vehicle that she stores on her property. She discovers that her homeowner’s insurance policy doesn’t provide sufficient coverage for these vehicles. To protect her investments, Jennifer adds a watercraft and recreational vehicle endorsement to her policy.

This rider extends coverage to her boat and recreational vehicle, ensuring they are protected against loss or damage. With the added coverage, Jennifer can enjoy her recreational activities with peace of mind.