Personalizing Your Policy: Insurance Riders and Endorsements

You cannot buy riders on their own; you can only add them to new or existing insurance policies. They can serve various functions too, including: 

Extending coverage to additional assets.

An example is jewelry riders on a homeowners policy; this would modify the base policy to include a level of coverage for your fine jewelry. Your insurer may request an appraisal before pricing and issuing a rider for collectibles and other unique personal items. 

Raising the coverage limit.

Your homeowner's policy may have a low limit on personal property losses resulting from fire or another covered incident. If you have a valuable collection of first-edition books, for example, you might want a rider that raises that limit (or one that specifically covers your books). 

Adding coverage for certain types of losses.

A standard homeowners policy often won't cover mold removal, but you may be able to add protections for mold-related damages with a mold rider. 

Adding new benefits.

On a life insurance policy, a terminal illness rider gives you the option to access some of your death benefits while you are living if you are critically ill. Another example is the identity theft rider on a homeowners policy, which helps pay your legal fees if someone steals your identity. 

Lowering your deductible for certain losses.

Riders can specify their own deductibles. For example, your homeowner's policy might have a deductible of $1,000 -- but the deductible on your jewelry rider might be $100.²

An insurance rider is not the same thing as an insurance floater -- although you may hear those terms used interchangeably. A floater adds coverage for a specific asset. A rider, when used to cover additional assets, extends protections to a category of items. Said another way, if you only want extra coverage for your engagement ring, you can do that with a floater. If you want coverage for all the jewelry in the house, you need a rider.

Insurance riders are usually cost-effective. Depending on the nature of the rider, it might raise your annual premium by 5% or 10%. There are exceptions, however, such as earthquake riders on homeowners insurance and accidental death benefits on life insurance.

The riders available for your policy depend on who provides your insurance and where you live. If you've already determined that you don't have the coverages you need, the simplest next step is to contact your insurer or agent and explain your situation. Ask specifically about riders and any standalone coverage options, so you can compare. Generally speaking, the rider will cost less -- but you'll have an easier time accepting the higher premium for the rider when you know the cost of the alternative.