When you signed up for workers' comp or homeowners insurance, you might have thought you were locked into a specific insurance contract. But the truth is, you can make changes to your policy at any time. All you need to do is add an endorsement to your insurance plan.
Insurance endorsements give you the freedom and flexibility to further customize your insurance policy to get the best coverage—even as your needs change. Let's take a look at the different types of endorsements and how they work:
What Is an Insurance Endorsement?
An insurance endorsement is a way to make legally binding changes to an existing insurance policy—such as adding, excluding, or modifying coverage.
Insurance endorsements are also referred to as "riders" or "insurance riders" since the endorsement overrides the initial policy.
What Does It Mean if You Have an Endorsement?
If you have an endorsement on your insurance, it means that you've changed your original policy.
How Insurance Endorsements Work
Endorsements can be issued when you purchase your policy, mid-term, or at renewal time—and, depending on the endorsement, it may cause your insurance premiums to change.
Getting an insurance endorsement is usually pretty straightforward. You'll start by contacting your insurance agent to let them know what changes you want to make. From there, they can coordinate with your insurance provider.
Expect to fill out some paperwork and be prepared to provide legal proof of the endorsement you're requesting (like a social security card with your new last name).
From there, the insurance agent will review the request and adjust your coverage as necessary. At that time, they'll also review any changes in cost to your plan—and let you know how your premiums will change as a result of the endorsement.
Endorsements are available on a variety of insurance policies, including workers' comp, homeowners insurance, life insurance, auto insurance, and business insurance.
What is an Example of an Insurance Endorsement?
Some examples of different ways endorsements in insurance can modify a policy include:
- Adding coverage: Let's say you own a retail store. Your business insurance policy only covers theft up to a certain amount—and you recently invested in some expensive new equipment. In that situation, you can issue an endorsement to increase coverage and protect your possessions.
- Exclusions or limiting coverage: Your original policy could include coverage you no longer need. For example, if you downsized and your business is now a one-person show, you can add an endorsement to exclude coverage for additional employees.
- Adding people: Did you recently bring on a new partner? You can use an endorsement to make sure they're protected by naming them as an additional insured on your insurance plan.
- Administrative changes: Endorsements can also be added for administrative purposes, like changing your mailing address or phone number.
- Changing deductibles: You can also use insurance endorsements to increase or decrease your deductible. (Just keep in mind that if you decrease your deductible, chances are your premiums will increase.)
- Changing the policy term: An endorsement can be added to expand or shorten the policy term (or, in other words, the length of your policy)—which can be helpful if, for example, you need to unexpectedly relocate your business or primary residence.
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What are the Different Types of Insurance Endorsements?
There are 4 different categories of endorsements for insurance, including:
1. Standard Insurance Endorsements
This is the most common type of endorsement. With standard endorsements, you (or your insurance agent) will be able to use an approved template to make updates to your policy.
Standard endorsements are a safe, secure, and easy way to make basic changes to a policy. Here are some examples of standard insurance endorsements:
- Name changes: Maybe you got married and need to change the name on your insurance policy to reflect your new last name. Or, you merged with another company, and your business has an updated name.
- Changing a mailing address: Do you prefer to get paperwork delivered to a PO Box? Updating the mailing address on your insurance policy would be considered a standard endorsement.
- New personal property: Did you recently inherit an expensive piece of jewelry or an original work of art? You might want to add additional coverage (in the form of an endorsement) to your existing home insurance plan.
2. Non-Standard Endorsements
Sometimes, you need to make an endorsement that doesn't fit into a standard template. For a non-standard endorsement, you need an insurance company to draft a new document or amend a standard template. A non-standard endorsement can be unique to the specific policyholder and their situation.
For example, let's say you're interested in generating some rental income on your property—so you build an accessory dwelling unit (ADU) in your backyard.
In that situation, you'll need to add coverage to your existing policy, as well as additional liability to cover your tenants. Because this kind of endorsement is a bit more involved and customized to your exact property/situation, it would be considered non-standard.
3. Mandatory Endorsements
Occasionally, an endorsement will be mandatory—and sometimes, it's even required by law. For example, in some states, you're required to provide workers' compensation insurance to domestic workers, like house cleaners.
4. Voluntary Endorsements
As the name suggests, voluntary insurance endorsements give the policyholder the opportunity to voluntarily add extra coverage to their existing insurance plan.
Say you're making some structural updates to your office space, and the contractor requests insurance coverage for the duration of the project. You can make an endorsement and add them—temporarily—as an additional insured on your existing policy instead of taking out a new one.
What are the Most Common Endorsements?
While endorsements can be catered to pretty much any need, some are more common than others, including:
- Personal property replacement cost coverage: Personal property replacement cost coverage is one of the most popular endorsements in insurance since most policies include personal property coverage, but not the replacement cost. For example, if your 3-year-old home computer is stolen, this additional coverage will provide enough coverage to buy a new computer instead of paying the estimated value of the stolen one.
- Valuables coverage: In the same vein of protecting personal property, valuables coverage is another common endorsement. A standard insurance policy likely covers stolen or damaged property up to a certain dollar amount—but that might not be enough. So, you can add an insurance rider to cover your most valuable possessions.
- Personal injury endorsement: Another common rider is a personal injury endorsement. This endorsement includes injuries that don't actually affect your physical body—like false arrest, wrongful eviction or entry, invasion of the right of privacy in a room, slander or defamation, or violation of your right to privacy. Standard insurance covers bodily injury and property damage, so this is a popular voluntary endorsement for additional coverage.
- Home business endorsements: Because so many people work and run their businesses from home, home business endorsements are increasingly common. Standard homeowner policies have $2,500 limits for business property—and don't cover legal liability. Adding a home business rider increases your coverage for property damage and includes coverage for accounts receivable, records, lost income, and extra expenses due to covered losses. The home business endorsement also includes liability coverage that covers bodily and personal injury, as well as property damage.
The Benefits of Endorsements in Insurance
There are a lot of ways that endorsements in insurance benefit you, whether you're a business owner or a homeowner. Some primary benefits:
- Insurance endorsements are a way to get customized coverage for your business.
- Making changes to your existing insurance plan is more convenient than purchasing an entirely new one.
- Endorsements can potentially save you money on your insurance premiums.
- Insurance endorsements give you flexibility in coverage.
- You're able to make endorsements at any time.
- You get greater peace of mind for your home or business knowing you have the right coverage.
Get What You Need with an Insurance Endorsement
In life, nothing is permanent—so your insurance policy should change as your life does. Whether you have insurance for your home or for your business (or both!), review your insurance policy each year to make sure it continues to meet your needs.
And it's never a bad idea to reach out to an insurance agent or insurance lawyer if you have specific questions about your policy or adding non-standard endorsements.