9 Optional Auto Insurance Endorsements Explained

If you need specialized insurance coverage, you can often find an insurer to provide it. After all, Lloyd's of London famously insured Tina Turner's legs and Keith Richards' hands.¹ 

Your auto insurance provider doesn’t have specialized coverage for your body parts – but you can get enhanced protection for new cars, classic cars, and your pets, among other things. These add-ons are called endorsements. 

Most auto insurance endorsements aren’t life-changing, but some can be cost-effective. Read on for a closer look at the most common endorsements, so you can decide which ones you really need. 

1. New car or better car replacement 

A new car or better car replacement endorsement improves your payout if your carrier deems your car a total loss. Without this add-on, your total loss payout will be the pre-accident market value of your car, less your deductible. 

Because cars depreciate quickly, market value can be substantially less than what you paid for the vehicle. Market value will also be less than what you’d pay to buy a new car. 

New car replacement essentially protects you from that depreciation. With this endorsement, your insurer bases your payout on the sticker price of your car’s newest model. You will still pay the deductible. 

New car replacement is available for new cars only, usually in the first year of ownership.²

Better car replacement also increases your total loss payout. Instead of getting the market value of your car, you'll get the market value of a car that's newer. Liberty Mutual's offering, for example, funds a car that's one year newer with 15,000 fewer miles.³

Do you need it? 

The new or better car replacement endorsement makes the most sense when both of the following are true: 

• You have a new car. 

• You are accident-prone or vehicle theft is common in your neighborhood. 

This endorsement is affordable, at $40 to $80 annually.⁴ Since you can only carry a new or better car replacement for a few years, the cumulative cost is well below the benefit if you have a total loss. 

2. Accident forgiveness 

According to Progressive, a single accident can raise your auto insurance premiums by up to 28%.⁵ Accident forgiveness blocks that increase. 

If you are a good driver, you may have some level of accident forgiveness built into your policy for free. Progressive, for example, has three tiers of accident forgiveness. 

1. The first tier is free and waives rate increases for claims of $500 or less. 

2. The second tier is also free and available to customers who have been with Progressive for five years or more. Claim amounts can be larger than $500.

3. The third tier of accident forgiveness is a paid endorsement. It allows for one eligible accident within the term of your policy.⁶ 

Note that some states, including California, prohibit accident forgiveness.⁷

Do you need it?

Forbes Advisor reports that accident forgiveness costs $15 to $60 annually.⁸ If you have years of good driving under your belt, one freak accident could cost you hundreds in additional premiums. Especially at the lower end of that price range, this endorsement can be worth it. 

3. Declining or vanishing deductible programs 

Declining deductible endorsements go by different names, depending on the insurer. They are also known as vanishing deductibles, disappearing deductibles, or deductible funds.

The exact rules for disappearing deductibles vary by insurer. Commonly, you'll earn deductible credits for each year you remain accident-free. If you do have an accident, the carrier applies for your deductible credits, resets the balance to zero, and then you start earning again.⁹ 

Do you need it?

Run the numbers on what you’ll spend with your carrier and what you get in return. It’s a good deal if you spend $10 annually to knock $100 off your deductible. But if the added premium is $50 or $60 annually, the trade-off is far less appealing. 

You might instead put that $60 into a high-yield savings account and build your own deductible fund. 

4. Rental reimbursement 

If your car is in the shop following a covered accident, your rental reimbursement endorsement helps pay for a rental car. Typically, you'll have a daily limit and cumulative limit per incident -- such as $30 per day up to a maximum of $600.

Do you need it?

According to Forbes Advisor, annual premiums for the rental reimbursement endorsement range from $27 to $90, depending on the daily and cumulative limits. 

As with the declining deductible plan, you could "self-insure" hereby saving $90 a year in a high-yield cash account. Paying for official insurance can be worth it, though, if these three conditions are true: 

• You own one vehicle only. 

• It's impossible to get to work without a car, and you can't borrow a car temporarily from anyone.

• You don't have an emergency fund.

5. Roadside assistance 

A roadside assistance endorsement gives you limited towing and breakdown services. Commonly, these programs offer a set number of assistance calls and a set mileage of towing. They are a cheaper alternative to roadside membership programs like AAA.

Do you need it?

Most drivers should carry some type of roadside assistance protection. You don't want to be stranded somewhere with a flat tire and no one to call. 

Carrier-provided roadside assistance will probably run you about $50 a year. That's worthwhile, as long as you're not covered by another plan. Double-check that your car dealership or manufacturer isn't already providing you with free roadside assistance. 

6. Classic car endorsement 

Classic car insurance protects collector vehicles at a stated value vs. actual cash value. The premiums are usually affordable because you're not driving your classic car to and from work every day.¹⁰ 

Do you need it? 

If you own a vehicle that's at least 25 years old and worth more than its book value, you probably need classic car insurance. Standard insurance coverage won't give you full credit for restorations, the scarcity of your vehicle, the limited miles the car drives, or the way you lovingly care for your classic. 

7. Rideshare insurance 

Your personal auto insurance probably suspends coverage as soon as you turn on your rideshare app. But the standard coverage you get from Uber or Lyft doesn't activate until you accept a fare. That leaves you exposed between fares without insurance. One fix is to add a rideshare endorsement to your personal policy, such as offered by Lemonade, among many others.¹¹   

A rideshare endorsement covers your driving during those in-between moments when the rideshare app is on but you aren't working a fare. 

Do you need it?

If you provide ridesharing services, then yes, you need a rideshare endorsement. Your insurance company will likely require it. According to Rideshareguy, the premiums will cost you $10 to $20 monthly -- a small price to pay for the added protection.¹² 

8. Full glass coverage 

Your comprehensive insurance typically covers windshield or window damage on your car. The trouble is, you pay a deductible on comprehensive claims. If your deductible is high, say $1,000, you might as well not have any glass coverage at all. 

The full glass coverage endorsement waives or reduces the deductible on glass damage only. 

Note that in Florida, Kentucky, and South Carolina, insurers must provide free windshield replacement with no deductible. In other states, policies vary. Some states require insurers to offer full glass coverage, while others do not.¹³ 

Do you need it?

Full glass coverage is generally affordable, ranging from $5 to $30 per year.¹⁴ Whether this cost is worth it depends on:

• The size of your current deductible. You may not be eligible for full glass coverage unless your deductible is $500 or more. 

• How much freeway driving and road trips do you do? 

• Where you live. 

If windshield cracks are common for you and you have a high deductible, you’re a candidate for full glass coverage.

9. Pet injury coverage 

A pet injury endorsement helps pay for vet bills and/or burial expenses if your pet sustains an injury in a covered loss. There will be a cap on the vet bill reimbursement and the death benefit. 

In the state of Missouri, for example, auto insurers will pay up to $1,000 for veterinary expenses and a $1,000 death benefit.¹⁵ There is usually no deductible.

Generally, you must have collision insurance to add a pet injury endorsement. Some carriers, including Progressive, include complimentary pet insurance with their collision coverage.¹⁶ 

Do you need it?

If you travel often with a dog or cat in the car, you could use a pet insurance endorsement – especially the free kind. Find an insurer that includes pet coverage free with collision. 

Do the cost/benefit analysis 

Opting into every endorsement provides you with excellent financial protection -- plus a huge auto insurance bill. That’s why it’s important to weigh the benefits against the costs for each of these specialized coverages. 

Often, you can best balance coverage and cost by insuring yourself for the less-common scenarios. To do that, save extra money for your emergency fund monthly. You'll keep your auto premiums low and earn some interest along the way.