An insurance rider is a term used to describe additional coverage added onto an existing insurance policy. Home insurance riders are needed to provide coverage for valuable items, dangerous possessions or other potential losses not covered by a standard policy. As most home owners will have additional insurance needs beyond what a standard policy will cover, it is important for a home owner to understand insurance riders.
Home Insurance Limitations
Though a homeowner may have enough insurance to cover the value of his or her home as well as the contents of the home, some items are excluded from home insurance policies. For example, it is common for a home insurance policy to only cover $1,000 worth of jewelry. However, many people have an engagement ring worth more than $1,000 and it does not take a large jewelry collection to push past the $1,000 mark. To provide coverage beyond the $1,000, an insurance rider is needed. A rider can also be used to cover events that are not covered by standard home insurance. For example, many home insurance policies provide no coverage related to the use of a trampoline or swimming pool. A homeowner who has these items should consider buying a rider that provides liability coverage for losses related to these items.
What Is a Rider?
An insurance rider is an additional layer of insurance coverage that provides specific coverage for items that are worth more than a standard home insurance policy. For example, home insurance policies will only cover possessions up to a specific amount. If a person has valuable works of art, jewelry or other expensive possessions, a rider will likely be needed to insure these items. A homeowner should understand that some companies refer to a rider as an endorsement; there is no difference between a rider and an endorsement.
Obtaining a Rider
To obtain a rider, a home owner simple needs to contact his or her home insurance company and request the additional coverage. In most cases, setting up the coverage is quick and easy, but in others the insurance company may send someone to the home to inspect the areas of additional coverage or the company may request an appraisal of the covered item. In addition to purchasing a rider, separate coverage for specific items can be purchased from a separate company. While a separate policy may be more expensive than a rider added to an existing home insurance policy, it won’t hurt to price the coverage through another company.
Common Uses
In addition to jewelry, swimming pools and trampolines, riders are used for a number of purposes. Valuable items such as works of art, Oriental rugs and expensive electronic devices can be covered by a rider. Collections can also be covered. For example, collections of antiques, firearms and coins can easily exceed the coverage amount provided by a standard home insurance policy meaning that a home owner will need to obtain a rider to cover these items. A rider may also be obtained to provide coverage for home business equipment and business liability which is almost always excluded from a standard home insurance policy. One often overlooked use of an insurance rider is insuring an older home to be rebuilt to meet new building codes. A standard home insurance policy would only pay to rebuild the home as it existed, not including the additional costs to rebuild to meet modern building code standards. An insurance rider could be used to cover this additional expense in the event of a fire or other loss to the home.
