What is an insurance rider?

Insurance coverage is designed to provide you and your assets with financial protection in case of a covered loss. However, insurance policies have limitations regarding what and how much is covered, potentially leaving you covering a portion of your damaged or lost items out of pocket. 

An insurance rider is an optional add-on to your policy, giving you additional coverage for your home, business, health, property, or life for a fee. This might be something like sewer backup or flood coverage to better protect your home through your homeowners insurance policy or added jewelry insurance in case you have very valuable pieces that your homeowners policy wouldn’t entirely cover.

Here’s a look at what an insurance policy rider offers, which types of riders may be available, and how much it can cost to add this extra coverage to your policy. 

Key takeaways

• Insurance riders are also known as endorsements, floaters, or amendments. 

• Riders are optional and provide modified or additional coverage to an existing insurance policy.

• Riders typically cost extra on top of your insurance premium.

How do insurance policy riders work?

Also known as an endorsement, floater, or amendment, a policy rider is designed to amplify or add to the coverage you already have with your insurance policies. Riders may extend your coverage and provide higher limits or include items or perils not covered (or not covered sufficiently) by your policy.

Insurance riders represent expanded coverage on an existing policy and are not intended to stand alone. This means that if you cancel or change the main policy to which the rider is attached, you may lose the rider’s coverage or need to adjust it.

Since riders are optional, adding one to your policy will typically increase your insurance premiums slightly. However, adding this coverage may not require much in the way of underwriting, so the added cost could be very minimal.

Insurance riders and your homeowners policy

Insurance riders broaden the protections offered by an insurance policy. That might mean providing more coverage for your valuable items or even adding perils (risks) that are not already included in your current policy. 

When it comes to homeowners insurance policies, here are some of the more common types of riders in insurance policies and what they provide:

• Jewelry insurance coverage — Your homeowners insurance policy might provide you with, say, $100,000 in personal belongings coverage, but that doesn’t mean that you could apply that entire amount to your jewelry collection should it be damaged or destroyed. That’s because there are usually sublimits built into your policy for high-value categories, often as low as $1,500 for jewelry. Instead, consider adding a jewelry rider if you have valuable pieces to protect.

• Other valuable items — Your policy might also have sub-limits for things like computers, smartphones, bikes, camping equipment, special collections (stamps, coins, art pieces, silverware, rugs, etc.) and musical instruments. If your valuables are worth more than these sublimits, consider the value a rider can provide. 

• Water backup coverage — Homeowners are sometimes surprised to learn that their homeowners policies may not cover water damage from backed-up drains, sewage, or sump pump issues. Without a rider, you could be responsible for covering any costly damage this water causes to your floors, furniture, and even your home’s structures.

• Extended replacement cost coverage — After a localized disaster, everyone in that community is trying to rebuild simultaneously, leading to increased costs for construction materials and labor. This could even raise the cost of rebuilding your home beyond the limits of your policy. Instead of paying this out of pocket, an extended replacement cost rider can help cover the delta.

• Building ordinance or law coverage — Even if your home was perfect to code when built, updated building codes could make it more expensive to repair or rebuild your home later on after being damaged by a covered peril. Building code coverage (also known as ordinance or law coverage) helps pay for these increased costs.  

• Service line coverage — Standard home insurance policies cover damages from pipes that suddenly leak or burst within your home. However, you often need a service line rider to cover problems with pipes in your yard or elsewhere on your property. (Bonus: Hippo offers service line coverage standard.) 

• Equipment breakdown coverage — Standard home insurance policies won’t cover your appliances, HVAC systems, water heaters, and other equipment when they break down due to mechanical or electrical failures (think power surges, short circuits, and ruptures). With an equipment breakdown rider, you’re protected if one of these costly systems is suddenly damaged or destroyed. 

• Identity theft coverage — Having your identity stolen is not only nerve-wracking, it can be costly to correct. With an identity theft rider, you may be reimbursed for legal fees, lost wages, and other expenses incurred while trying to fix the fraud.

Why and when would I need an insurance rider?

If you already have an insurance rider, policy changes and updates can be a great time to reevaluate your needs and ensure you have the right coverages for your specific situation. 

For example, if you have a new baby, get married, or buy a home, you should reevaluate your life insurance coverage and potentially bump up your benefits. Each time your homeowners policy renews, take inventory of your belongings and their values to ensure you have enough coverage to protect yourself.

You can also consider adding riders to your policy each time you make a significant purchase, like a high-value piece of art or jewelry. If you’ve recently upgraded the appliances in your home, installed a new furnace, or plan to add a state-of-the-art security system, this can also be a great time to look at which riders your insurance company offers and how they can protect your assets.

What are the benefits of adding an insurance rider?

Insurance riders allow you to relax a bit, knowing that your home, special belongings, and even your beneficiaries are covered in times of emergency. 

Some other benefits of adding insurance riders for boosted coverage include lower deductibles and better coverage for lost items.

The coverage on an optional rider will often have a lower deductible than the overall policy to which it’s attached. Lower deductibles can save you money if you experience a smaller loss or damage to a single item. 

For example, let’s say that you drop and accidentally destroy your $2,500 laptop. Your general property insurance policy will cover the item, but your homeowners insurance deductible is $1,000. In this case, you’d be responsible for covering the first $1,000, while your carrier will only pay out the remaining $1,500 to replace the computer. If you have a laptop coverage rider with a $100 deductible, your provider will pay out $2,400 after approving the claim.

How much does it cost to add a rider to your policy?

Home insurance riders are fairly inexpensive, but the cost depends on the type of rider. For example, riders for jewelry and collectible items might cost $1–2 per $100 of value. In other words, a rider for a $7,000 watch might cost between $70 and $140. 

Other riders like extended replacement cost coverage and building codes coverage might cost somewhere in the $25–$75 range. 

Home insurance riders are relatively cheap and offer low deductibles and accidental loss coverage.

Premiums may increase when adding a rider to an insurance policy, though some riders are included at no additional cost. The cost really just depends on the types of insurance riders you add to your policy. For instance, you may need to pay to add sewer backup coverage to your homeowners policy, but your life insurance carrier may offer a child rider or waiver of premium rider gratis.

Still have questions?

Interested to find out more about insurance riders? Have a look at some of the most commonly asked questions on the topic.

What is a rider on an insurance policy?

A rider in insurance is optional coverage that can be added to an existing parent policy. Insurance riders provide policyholders with auxiliary coverage such as expanded coverage limits, additional perils not included in their standard policy, and more. 

What items are commonly scheduled on a rider?

Insurance riders can provide a wide range of coverages for policyholders, such as increased limits, coverage for additional perils, waivers of premiums, expanded coverage for specific high-value items, and more. Available riders will vary according to the type of insurance they’re attached to and the options offered by the specific carrier. 

Is an insurance rider necessary?

Insurance riders aren’t necessary or required but can be a low-cost way to expand your insurance protection. 

What is the difference between a rider and an endorsement in an insurance policy?

There is no difference between insurance riders and endorsements. These are interchangeable words—along with floater and amendment—used to describe optional, add-on coverage to an existing insurance policy.

Is a rider part of an insurance contract?

When you add a rider to an insurance policy, it becomes part of that insurance contract for the duration of the policy term period. 

Can you add a rider to an existing term insurance policy?

Your insurance carrier may allow you to make some changes, such as adding a rider, to an existing term insurance (or even a permanent coverage) policy, especially if the policy is up for renewal or you’ve recently experienced a qualifying event. Adding a rider may result in an adjusted policy premium, and your carrier may even choose to reissue the policy with a new contract period.