What Is an Insurance Rider?
To understand the basic idea of insurance riders, let’s turn to a common scenario. Let’s say your great-grandmother gave you a necklace and a couple of rings that are now worth about $5,000. You’d like your home insurance policy to repair or replace these items if they’re damaged by, say, a fire or another loss type. However, your policy might only pay out a maximum of $1,500 for jewelry — a common limit.
That’s where an insurance rider comes in handy! Simply put, an insurance rider is an optional add-on to your policy that gives you additional coverage for a small fee. (In this case, you would add a jewelry rider — more commonly known as jewelry insurance — to your policy.) Let’s explore the different types of home insurance riders, as well as the benefits and costs.
(FYI: You might also hear insurance riders referred to as endorsements, floaters or amendments.)
An insurance rider is an optional add-on to your insurance policy that gives you additional coverage for a small fee. It’s also commonly called an endorsement.
Insurance riders and your homeowners policy
Insurance riders broaden the protections you already have in your home insurance policy. That might mean more coverage for your valuable items. Or, it might mean adding coverage for events that are not included in your current policy. Let’s take a look at some common home insurance riders:
- Jewelry: You might have $100,000 of personal property coverage, for example, but that doesn’t mean that you can apply that full amount to your jewelry collection should it be damaged or destroyed. That’s because there are often sublimits in your policy (typically $1,500 for jewelry). You might look into a jewelry rider that provides additional coverage.
- Other valuable items: Similarly, your policy might have sublimits for computers, smartphones, bikes, boats, trailers, camping equipment, special collections (like stamps, coins, art pieces, silverware, rugs, etc.) and musical instruments. If your valuables are worth more than their sublimits, you might consider a rider.
- Water backups: Homeowners are sometimes surprised to learn that standard policies don’t cover water damage from backed up drains or sump pump issues. Since water damage to furniture and your home’s structures could be expensive, you might want to consider a rider.
- Extended replacement cost coverage: Let’s say that, after a disaster, everyone in your community is trying to rebuild and is looking for construction materials and labor. That increased demand raises the cost of rebuilding your home — possibly above the limits in your policy. You might consider adding an extended replacement cost rider.
- Building codes coverage: Occasionally, cities implement new building codes. Those new requirements could mean that it would be more expensive to repair or rebuild your home. You might look into building codes coverage (also known as ordinance or law coverage), a rider which pays these increased costs.
- Service line coverage: Standard home insurance policies cover damages from pipes that leak or burst within your home. However, to cover problems with pipes in your yard or elsewhere on your property, you often need a service line rider. (Bonus: Hippo offers service line coverage standard.)
- Equipment breakdown coverage: Standard home insurance policies don’t cover your appliances, heating and air conditioning systems and other equipment when they break down because of mechanical or electrical failures (think power surges, short circuits and ruptures). That’s when you’ll need to add an equipment breakdown rider.
- Identity theft: If your identity is stolen, an identity theft rider can reimburse you for legal fees, lost wages and other expenses.
Many homeowners add riders to their policies to cover jewelry, electronics, bikes, outdoor equipment, musical instruments and special collections. Other common riders include water backup, extended replacement cost and building codes coverage.
Benefits of home insurance riders
Home insurance riders can help you relax a bit knowing that your home and special belongings are covered in times of emergency. There are also a couple of other benefits:
- Lower deductibles: Often, your rider will have a lower deductible than your general home insurance policy. For example, let’s say that smoke damages your $2,000 computer. If your property deductible is $1,000 and there’s no sublimit for your computer, then your provider will only pay out $1,000 for the computer. If you have a rider for your computer and that deductible is $100, then your provider will pay out $1,900.
- Accidental loss coverage: Let’s say you lost your 20th century gold coin somewhere. Your home insurance policy likely wouldn’t reimburse you to replace the coin (since that might not be a covered event in your policy). However, a rider would cover this accidental loss.
Cost of home insurance riders
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.
Do I need a home insurance rider?
Technically, you don’t need an insurance rider since it’s an optional add-on to your standard policy. However, riders make sense in certain circumstances, like if you have a lot of valuables that your standard personal property coverage won’t fully cover or if you’d like protection against water backups and other events not covered in your policy.
When should I get an insurance rider?
When you purchase home insurance, you should also consider your rider options. Then, you can crack open the champagne and hold your house-warming festivities! Aside from that, you should also consider insurance riders every time you purchase a new valuable like a TV or an engagement ring. We recommend taking inventory of your belongings every year to see if you have enough coverage.
Luckily, our experts can help you pick out all of the common riders that are right for you — and a lot of the ones you never knew existed! Ask us a question about keeping your stamp collection or new mountain bike safe, or just say hello.