Home & Auto Insurance Policy Endorsements for Extra Protection

February 4, 2009

A good insurance agent will recommend policy endorsements that will add value to your specific situation regarding your home or automobile. An endorsement is basically a separate policy coverage added on to the original policy form for an additional premium. They are also referred to as policy “riders”. There are many valuable endorsements that are cheap to buy and provide a valuable coverage to your two biggest assets, your home and car. Here are a few that are worth looking into.

Homeowner Endorsements

Personal Property Replacement Cost Coverage

Most policy forms for single family residences carry a personal property replacement cost endorsement, but make sure you ask your agent about it before you sign on the dotted line. This endorsement allows you to recoviter current market value replacement cost of your personal property if it is stolen or damaged.

Fungi, Wet, and Dry Rot Coverage

This is an essential endorsement to have no matter where you live. Many policies are excluding coverage for mold, and wet/dry rot damage. However, you can purchase an endorsement that adds a separate coverage for this type of damage if it is hidden in the walls, attic, basement, or floor boards. The smallest pipe leak in a wall or intermittent roof leak that is not noticeable will cause a world of trouble with wet rot and mold damage. It’s wise to get about $25k to $50k of coverage.

Personal Property Scheduled Endorsement

This is where insurance companies catch people off guard. They’ll give you x amount of dollars in coverage for your personal property, but then they limit certain categories of personal property to a certain dollar amount such as fine jewelry, furs, firearms, fine china, and cash.

If you have expensive pieces of personal property and fall under the categories, get an appraisal for their replacement value, take it into your agent, and ask them to “schedule” the piece onto your policy. You’ll pay extra in premium per year, but the cost is minimal for the assurance that you have full coverage on your most prized possessions.

When I was an adjuster, I saw thousands of customers get burned, because the policy covered only up to $1,000 for fine jewelry in the event of a theft. Don’t let that happen to you!

Identity Fraud Protection

There are separate policies out there, but I think it’s more economical to get a rider placed on your homeowner’s insurance instead. The rider will help you pay for expenses incurred to help you fight to get back your identity.

Home Business Coverage

Another thing insurance companies love to limit in their policy forms is home business liability and personal property coverage. Buy an endorsement that either adds or increases this coverage if you conduct any type of business out of your house.

Law and Ordinance Coverage

Policy forms typically offer some type of coverage, but it’s usually not enough to cover you fully in the event that you need to use it. L&O coverage kicks in when your home needs to be repaired because new building codes or ordinances call for mandatory upgrades. Instead of paying for these upgrades out of your pocket, make sure you have about 20 to 30% of your home’s value in this coverage.

 

Auto Policy Endorsements

Road Service

It’s cheaper to tack this onto your auto policy than it is to pay for AAA’s service.

Death and Disability

An extra death benefit to help with funeral expenses for yourself or family member if the worst happens in a car accident.

Comprehensive Transportation Benefits

If something happens such as a tree falling on your car, this will cover your expenses to rent a car while the car is being repaired.

Collision Transportation Benefits

Same as above, but it kicks in if your car was in an accident.

These small additions to your insurance policy are extremely important, because they often add or increase coverages that insurance companies limit due to the frequency and likelihood of the particular claims. Many of these endorsements will add a small amount to your YEARLY premiums but will more than pay for themselves if you ever have to use them. Did I miss any?

Erik

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Erik
Erik Folgate is a husband and father living in Orlando who's been writing about money online for 6 years. Digging himself out of $20k of debt after college and his former experience in the insurance industry give him some useful insights into personal finance issues.

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3 Responses to Home & Auto Insurance Policy Endorsements for Extra Protection

  • Alejandro

    These are all good ideas, but you forgot one important and relatively inexpensive endorsement; an umbrella rider. It should be for at least $1,000,000 and costs just a few bucks.

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