What Are Insurance Endorsements? A Definitive Guide

An insurance endorsement is a change to an insurance policy. The endorsement may change anything from a significant aspect of coverage to relatively minor details in the insurance document. At times, endorsements are also called “riders.” Endorsements can be issued at any time, regardless of whether the insurance policy has already been put into effect. It is a necessary, legally binding amendment to the insurance policy. 

Endorsements are often used when your policy either doesn’t cover something you need or has extra unnecessary coverage. They can also provide crucial updates to an insurance policy or clarify confusing language. 

Do I Need an Insurance Endorsement?

If you think you need an insurance endorsement because your insurance contract does not cover your needs, be sure to first double-check. Make sure you understand what your original contract policy covers, as every insurance product lists the terms of the contract and the coverage that results from it. If you’re unclear where to find the list, you can contact your insurance agent for clarification.

If you need something to be covered that is not in your current policy, you’ll need an endorsement to make sure you’re covered. There’s also a chance you’re paying for coverage you don’t need. In this case, you may be able to have it removed and save money on your premium.

At times, you may also need to update your coverage. Personal circumstances constantly change. Be sure to review your policy at least once a year to see if an endorsement is needed to make sure your policy meets your current needs.

It’s important to keep in mind that if you need to add an endorsement to what an insurance contract covers, it will result in an adjustment to your insurance premium. The premium may be higher or lower. Still, because coverage is being either expanded or reduced, the endorsement will result in a different premium.

What Are the Types of Endorsement?

Although there’s a wide variety of endorsements, they fall into a few basic categories. The various types of endorsements include:

  • Standard endorsement. These endorsements cover things people commonly change in their policy, such as a new address or covering incidents that are common to the area but aren’t yet included.
  • Non-standard endorsement. These endorsements involve changing the basic template of the insurance document. A non-standard endorsement may also include something completely new being added to the policy.
  • Mandatory endorsement. A mandatory endorsement is one in which neither the insurer nor the insured has control over. These aren’t common, and they may occur because of a change in state law coverage requirements.
  • Voluntary endorsement. These are endorsements that aren’t required but are made solely at the discretion of the insured. 

Common Insurance Endorsements

Adding Coverage for Valuable Items

You may need to add coverage for personal items of high monetary value. These items may be at a high risk of being significantly damaged, stolen, or vandalized. Adding them to your insurance contract can help you have peace of mind because you could be covered for the full amount to replace them.

For instance, let’s say your insurance policy covers you for the loss of up to $10,000 of personal property. You then inherit a valuable piano from a relative. The piano has been appraised, and it is worth $15,000. If the piano were damaged or destroyed, you might not have enough insurance coverage to replace it. In this circumstance, it would be wise to get an endorsement policy to ensure you’re fully covered.

Upgrading to Replacement Cost Instead of Cash Value

One of the endorsements you can decide to apply is to upgrade from cash value to replacement cost. If an item is destroyed, the cost to replace it will depend on whether you want to get a brand new one or if you’re willing to settle for one that is used. The amount you’re sometimes covered for only covers the cash value of an item.

However, this price will likely be lower than what it would cost to replace the item with a brand new one. If you upgrade your coverage with an endorsement, you can get the money you need to buy a brand new item. 

Severe Weather Damage

If you live in an area that is prone to severe weather, you may need to add coverage to insure you against specific types of damage caused by the elements. Usually, the coverage you have is sufficient. However, if there are weather predictions for the coming season that spell trouble for your area, you may want to upgrade your coverage. This will help make sure you can recover any resulting losses.

For example, there might be a large weather system that threatens to bring more “acts of God” this year than last, such as El Niño. It may be wise to get an endorsement to make sure you’re covered for even extreme damage to your property.

Home Upgrades and Renovations

If you renovate a kitchen, living room, or basement, you may need additional coverage. This will guarantee your policy has enough to replace or repair everything in your new setup. Some items installed during an addition can run a high price tag, so an endorsement can save you from paying out of pocket if something were to happen.

How many types of insurance you have will depend on your needs, and usually, what you have is adequate. However, your current policy may not cover something you add to your home during an upgrade or renovation.

What to Do if You Need a Different Kind of Endorsement

Regardless of the types of insurance you have, you may discover that you need an endorsement. If this is the case, you can reach out to NSI Insurance Group for more information.

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