March 1, 2013
In addition to the standard coverage’s provided by most insurance policies, there are options or “riders” which can be added to the policy. A “rider” is an additional set of terms and conditions that “rides on” the basic package offered by the insurance company. Below is a sampling of some of the most common riders that can be added to or purchased along with an insurance policy.
1. Scheduled personal property endorsement (personal property floater).
Most insurance policies limit the coverage that is provided for personal property, especially certain categories of personal property (check with the individual insurance company to determine what categories of personal property it lists with respect to limitation of coverage). For example, most policies limit the loss of money to $100 – this is to prevent the insured from claiming a high dollar value loss of money whenever a loss does occur. Jewelry is usually covered up to a certain amount but any individual item is only covered for a stated amount, regardless of actual value.
If you have coin collections, cameras, and jewelry in excess of the stated amount of coverage for these categories, you can add a rider to the insurance policy to cover the additional value of these items. The cost is usually determined on a “per thousand” dollar basis. The cost per thousand is often nominal when compared with the risk of loss. If you have items of high value, make certain that there is no limitation to their coverage. If there is, have the items appraised by a certified appraiser and then get the insurance company to add a rider to cover the additional value of your personal property.
2. Special computer insurance
Your home policy may or may not cover that brand new WebTV you just purchased. Or the scanner, tape drivers and speakers you need for operating your home office. To cover them, your insurance company will probably require you to purchase a rider as additional coverage. You may also need a business policy to cover your home office equipment.
3. Income property
Some insurance companies allow you to add a rider that covers residential premises other than your primary residence. This is most likely to occur if you own your home plus another residence that you rent out. As it is with your primary home, it is important to maintain insurance on rental property. Many insurance companies will allow you to add additional properties to your existing homeowner’s insurance.
4. Secondary residence premises endorsement
If you own a vacation home, it is important for you to maintain coverage for that residence as well as your primary residence. Like income property, many insurance companies offer secondary residence (vacation) premises coverage as a rider to your homeowner’s insurance policy. You are often able to obtain the needed additional coverage at a reduced rate by purchasing a rider (as opposed to a separate, stand-alone insurance policy).
5. Theft coverage protection endorsement
Most insurance policies have strict limitations with respect to coverage of personal property loss due to theft. To expand the amount of insurance for personal property due to loss by theft, purchase a rider for additional theft coverage under your homeowner’s or renter’s insurance policy. You should check your current or “about to be purchased” insurance policy to determine the amount and type of coverage it has for loss of personal property due to theft.
6. Home business
Having a home-based business presents a variety of exposures to loss that must be considered. Many homeowner’s or renter’s insurance policies exclude coverage for losses as a result of the operation of a business — including business-related liability (e.g., a customer trips over your furniture and breaks an arm). Many insurance companies now recognize that many people operate home-based businesses. If you operate a business out of your residence, make certain that coverage is available through your insurance policy. If your home-based business is excluded, you may be able to add a rider to the insurance.
7. Watercraft and recreational vehicle endorsement
Many insurance policies exclude coverage for watercraft and other recreational vehicles commonly located (stored) at your residence. In addition, these vehicles are often excluded under standard automobile insurance policies. To obtain coverage for loss of these vehicles, many insurance companies offer an optional rider. Check with your insurer to determine if such coverage is excluded and, if so, whether a rider may be added to the insurance policy to cover these vehicles.
8. Land and mine subsidence coverage
Some areas of the country are susceptible to landslides and land subsidence losses. You may recall images of hillside homes in Southern California sliding into muddy ravines. Most insurance policies exclude loss of property due to land subsidence, but some insurance companies provide a policy rider to protect the homeowner against loss due to land subsidence.
Although not common, some areas of the country had extensive mining operations in the past. Loss due to the structural failure of old or abandoned mining operations is often excluded from coverage. If your residence sits on top of a former or current mine operation, check to make certain there is coverage should the mine collapse. If not, see if your insurer offers a rider option.
9. Sewer and drains back-up
Similar to flood (excluded under all homeowner’s or renter’s insurance policies), a backed-up sewer or drain can cause significant damage and may be excluded from coverage by the terms and conditions of the insurance policy. Many insurance companies offer a rider to protect against the risk.
10. Workers’ Compensation
If you have people who come to your residence to do work, you may be viewed as an employer. For example, if you have someone who provides childcare in your home or you have a neighborhood youth mow your lawn once a week, these people may well be your employees (often referred to as “casual” employees). Most states require all employers to have workers’ compensation coverage for their employees. Failure to provide workers’ compensation insurance doesn’t only expose you to severe and catastrophic loss should someone be deemed to be your employee at the time of an accident or injury, but also failure to provide workers’ compensation insurance could result in stiff fines and penalties. Some insurance companies offer a rider to their homeowner’s insurance policies to provide coverage for these “casual” employees.
For assistance with insurance riders please call us at 1-800-585-1776 and one of our homeowners insurance agents will help you.