Definition and Examples of Insurance Endorsements
An endorsement, or "rider," can be used to add, delete, exclude, or alter coverage. It can be issued during your policy term, at the time of purchase, or when you renew the plan. It's a legally binding change to an insurance contract.
For example, you may add an insurance endorsement to cover expensive jewelry or art that would not be covered by your regular homeowners' insurance policy.
- Alternate name: Rider
How an Insurance Endorsement Works
An endorsement is a policy change that can be added during the term without renewing the policy. Your premiums may change as a result of an endorsement. They're often used on property and casualty policies. Riders can also make changes to health and life insurance plans.
They remain in force until your policy ends, and they may renew under the same terms and conditions as the rest of your policy. One exception is if the endorsement states that it's for a specific timeframe.
If you receive a document that says it's an endorsement to your policy, compare it to your original declaration page to see what has changed, or contact your insurance representative to make sure you understand the new document's consequences.
One kind of endorsement commonly used for a short term is a vacancy permit for a home that's under renovation. Your homeowner's insurance coverage may be limited while no one is living in the home if you don't have this permit.
Types of Endorsements
Riders can be additional documents added to your policy, or they can replace your previous policy documents. Suppose you change your address with your insurance company. It sends an endorsement with the new address. The old contract with the old address is no longer valid. The rider replaces the original contract document.
It's often done by adding documents to your policy when an endorsement adds something, when it lists extra conditions, or when it adds restrictions or limits after underwriting by the insurance company. This is because the policy wording or contract isn't changed, only these new terms. The endorsement becomes an add-on to the plan. It should be kept with the original document.
What Do Endorsements Cover?
Endorsements can cover a wide range of needs. One spouse may request a rider to remove an ex-spouse from home or auto insurance when a couple is getting divorced, The spouse will receive new documents showing the current owner.
A common example with homeowner's insurance is including endorsements for certain items. Valuable items like art and jewelry may be worth more than the coverage limits in a standard policy, so these items may have riders that better reflect their value. These changes will also increase your premiums.
Endorsements can also remove or limit coverage. A homeowner's insurance plan may have a rider excluding certain types of water damage. You could also increase your deductible and receive an endorsement showing that change.
Your deductible is the amount you pay for covered losses before your policy begins coverage.
Do I Need an Insurance Endorsement?
You may need an endorsement if you have items of value, or if you've experienced a change to your home or business. It's a good practice to review all your policies each year to ensure that they meet your current needs. Your agent can assist you in assessing whether you need an endorsement or a different type of policy.
- An insurance endorsement is a change or addition to an insurance contract that alters the terms or scope of the original policy.
- It can be issued during your policy term, at the time of purchase, or at renewal. It's a legally binding amendment to a contract.
- Endorsements remain in force until your policy ends. They may renew under the same terms as the rest of your policy.
- Endorsements can replace the current policy or be added to your current policy.
- They cover a range of situations, including taking insureds off a policy, changing addresses, or adding coverage for specific items.