In simple terms, insurance endorsement refers to an addition or amendment to the actual policy that changes its terms, conditions, and coverage. Hence, it is a critical concept for policyholders because, in a way, it modifies the existing insurance policy. This is a common concept across different insurance policies like life, home, and health insurance.
If you truly want to comprehend endorsement in insurance, think of an outfit that you purchased, and you want customizations. You might remove or combine elements, change their color, or adjust the size to better suit your preferences. So, let’s begin this article and show you the multi-faceted aspects of endorsement.
What Is An Insurance Endorsement Used For?
These take precedence over your existing policy, which voids outdated information. If you aren’t sure of your original policy coverage, make sure to talk to your insurance agency. By now, you know that insurance endorsements modify the policy you already have. But is that all? Here are a few other uses as well:
Do you wish to insure a valuable neckpiece of yours? Your actual homeowner’s policy might cover theft or damage up to amounts like $5,500. If the actual worth of your jewelry is just $1,000, there is no luck. But, an amendatory rider might add coverage up to your desired amount, which can help you stay protected.
Excluding or Limiting Coverage
Secondly, if your policy has coverage that might be unnecessary, you can save money by excluding or limiting the coverage. For instance, if your home insurance covers the exterior even though you don’t need it, limit your coverage just to the interior of your house.
Remove or Add Locations
Suppose you have several properties. With insurance endorsement, you can save some money by combining several locations under the same policy. It helps you combine new properties or remove the old ones from your existing policy as per your desires.
Remove or Combine Insured Individuals
Have you been recently divorced or married? You might be able to use an insurance rider policy for adjusting who owns the property on insurance documents.
The Different Types Of Insurance Endorsements
Since they can be combined at any time of buying, you might want to consult your insurance agent to get your policy amended. For a better understanding, endorsements in insurance have been classified into four main categories:
1. Standard Endorsements
One of the most commonly requested endorsements is standard endorsements. Insurance agencies consist of templates that can be easily applied to the policy as and when requested. These include:
- Changes in the name
- Changes in the address
- Sewer backup rider or endorsement
- Earthquake endorsement
ALTA, or the American Land Title Association, consists of tons of endorsements covering several moderations related to title insurance policies. They consist of common issues that emerge with your titles, like tax mishaps or zoning.
2. Nonstandard Endorsements
These forms of endorsements either consist of specially drafted documents or alterations to usual templates. Such policies operate best when there are unique situations, for example, while protecting highly-valued assets or protecting unique risks.
In case you belong to one of the 2,500 billionaires across the world, it might sound like yacht insurance. Nonstandard endorsements are no longer recommended for the broad category of policyholders. Ensure consulting an attorney to verify if you need one.
3. Voluntary Endorsements
This is a bit of a different form of insurance endorsement because voluntary endorsements are not mandated by the law. Various endorsements fall under this particular category.
Consider it as the time you purchase real estate in an earthquake-prone location. There might be chances when the law does not ask you to combine earthquake insurance with your existing policy. But if you want to stay on the safe side and add earthquake insurance, it would be an example of voluntary endorsements.
Examples That Will Help You Understand Better
The Internet is literally flooded with examples of insurance endorsements, although I will take you to some common riders. Being a house owner, you might want to protect yourself completely, which is why it is necessary to go through the following examples:
Personal Property Rider
A scheduled personal property rider combines coverage for precious items such as art, collectibles, and jewelry. With the help of this endorsement, you can add up to your coverage limits. In case of damage or theft, one might be reimbursed adequately. Remember, your premium might be adjusted only if your coverage increases.
Various standard house owners’ insurance policies resist cover flooding. In case you live in areas with high risk, combining flood coverage might provide you extra protection in the case of disasters. Certain areas might also mandate you combine flood coverage with the policy.
Home Business Riders
We have seen a lot of people operating their business from home. Hence, the associated costs with your business are not generally covered under standard homeowners insurance. This shows that stolen or damaged work equipment or supplies will not be covered.
Furthermore, business-associated liabilities are not usually covered. Based on your home business, you might need professional or product coverage. In case you possess an at-home business, you can get yourself a home business endorsement for protecting your policy.
It might be safe to say that an insurance endorsement lets you modify your current policy to better suit your requirements. But you might be surprised to know that it does something more. You can even correct errors and adapt to life changes with these riders.
All you need to do is review your policy regularly, communicate with your insurer, and comprehend the costs. Doing these will simply save you from spending too much out of your pocket.
Well, that’s all about it. I hope this article walked you through the essentialities of insurance endorsements. If there is anything that you would like to share, comment below. Happy reading!