The ABC's of Insurance Riders

By Catherine Powell

Image courtesy flickr

If you have an insurance policy, you probably have been exposed to what are termed “Riders”, although you may not know what they mean to you.  Also known as “Endorsements”, riders are add-ons to policies that affect the limitations of a policy.  Sometimes these are added as a benefit to a policy, while others are used to restrict how or where the coverage applies.  Either way, ignorance of riders is not bliss, as some policyholders have found to their chagrin when their claim was denied.  The way I tell customers to think about riders is to consider them like optional extras like leather bucket seats in a car.  While they may cost a little more to add, they make the ride much more comfortable for years to come.

1.      A is for Additional Coverage – This is one of the benefits of insurance riders.  They can be added to a policy to include coverage that otherwise would be excluded.  Some examples of this kind of rider would be homeowner’s coverage in the event of an act of God, such as a tornado, an earthquake or a flood.  These are good things to have if the sky opens up or the ground begins to shake, only to cause damage to your property.  Other add-ons that are nice to have are those that increase the limits for personal possessions, valuables or providing replacement value rather than cash value for property that are damaged or destroyed due to storm, fire, flood or theft.

Conversely, the omission of any of the above-mentioned riders from your existing policy is a good reason to sit down with your insurance agent to discuss what can be done to plug any gaps in your current coverage.  Since all insurance companies aren’t created equal, only your agent will know which ones offer the endorsements you desire.  Failing that, they can tell you how much extra it would cost to add a rider that provides a specific type or amount of coverage. 

Image courtesy picpedia

2.      B is for Business Policies – Whether you operate a business out of an office in the sky or out of your home, there are specific riders that can affect your coverage.  Let’s say you operate your business at one location but store inventory at another location.  A commercial property floater rider will protect both without having to take out a separate policy.  Another type or rider specifically developed for business is what’s called Business Interruption Insurance, that kicks in should a primary supplier, partner, or customer closes their door for good.  If you own the building you do business in, your commercial property coverage may exclude such things as underground pipes, fences and even the building’s foundation.  If you hire part time help and wish to extend worker’s comp benefits to them, a rider could be the way to go. 

If you run a business out of your home, don’t assume your homeowner’s policy is going to cover your business insurance needs.  In fact, this is one of the exclusions that is commonly placed on homeowner’s policies.  Why?  Depending on the type of home business you operate, the potential for theft, fire or even slip and fall claims rises dramatically.  Even if you have no walk-in traffic involved with your home business, don’t think you are necessarily in the clear.  For instance, if the FedEx delivery driver slips and falls while delivering business supplies to your home, your homeowner’s policy will not cover the injury or any other legal claims derived from the injury.  That’s the bad news.  The good news is you don’t have to sign up for a separate business liability policy.  Not when you can add a rider to a homeowner’s or renter’s policy for as little as $100 a year.  Problem solved.

3.       C is for Coverage – And coverage, as I have shown, is key.  Let’s say your homeowner’s policy includes $50,000 in personal property coverage, but you have expensive jewelry, priceless antiques, collectibles or artwork that’s worth much more.  A rider known in the business as a floater, is all you may need to increase the coverage or add items that are excluded from coverage in your existing policy.  To obtain such a rider, you’ll need to provide proof of the items value to the insurance company.  This could well entail your collection being appraised by a professional.  But it’s a small price to pay to give you peace of mind when it comes to your cherished possessions.

Image courtesy flickr

Other benefits of riders include low or no deductibles that can mitigate the high   For instance, if you have a prized Fender Stratocaster worth $3,000 and your homeowner’s policy carries a $2,000 deductible, a rider can make sure you can buy a Strat of equal value should the guitar be stolen or destroyed in a fire.  Another protection for expensive musical instruments, bicycles and camera equipment that should suddenly disappear from your home or car would be an Accidental Loss rider. deductibles normally associated with typical insurance policies.

The cost to add a rider to increase your coverage isn’t at all steep.  Jewelry can usually be scheduled for around 1.5 -2% of its value.  That means $10,000 worth of jewelry would set you back between $150-$200 per year.  Collectibles are even less expensive to insure.  If you have a coin collection or baseball collection valued at $20,000, the cost to insure it would be around $160.

Regardless of whether you are more concerned about adding morel coverage or exclusions on your existing policy, an insurance rider could be the ticket to riding off into the sunset.  Talk to your insurance agent today to find out more.

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/