What’s a rider?
That’s a great question and an excellent place to start. A rider, also known as an endorsement, is something that changes the original insurance policy. Insurance riders can add, enhance, reduce, or even remove coverage. Some riders will add minimal or no cost, while others can add a significant one. Knowing which riders are available, what they do, and how they can protect you is essential.
Here are some riders you should consider.
The Water and Sewer Backup rider
Water can turn a well-kept home into an instant disaster area, and insurance policies have many exclusions for damage caused by it. The water and sewer backup endorsement is an excellent way to insure against specific events not otherwise covered within your home insurance policy.
Contrary to popular belief, your town is not responsible for the damage you suffer due to a backed-up sewer. When applicable, the municipality will correct the issue within the system that caused the backup. But, the cleanup or repair within your home is your responsibility.
Heavy rains can overwhelm your neighborhood’s storm drainage. Your sump pump might not be able to keep up with the task of removing water away from your basement. If it couldn’t or burnt out trying, you could have a flooded basement on your hands.
Neither the sewer nor the sump pump failure is found on the home insurance unless you’ve added this rider.
What it protects against
- Water or sewage which backs up through sewers or drains
- Water that overflows from within a sump pump
Who should have it?
Everyone not on a septic/well system should have the water backup rider added to their policy.
How much water backup coverage can I buy?
The amount of coverage you can buy will vary by carrier. While you might be inclined to purchase $100,000 worth of coverage, home insurance carriers often limit the amount.
$5,000 is the most common among carriers. Some won’t go any higher, and others will allow up to $10,000 or $15,000. A few companies, such as Erie Insurance, offer the option to purchase an amount up to the house’s replacement value. It’s unlikely that water backup would cause damage to that extent. However, if a sewage backup damaged your finished basement, $15,000 might not be enough.
Regardless of how much you purchase, a deductible will apply. The water backup rider has a separate deductible from the rest of the policy, with $1,000 as typical.
How much extra does it cost?
The cost to add this coverage depends on the amount purchased. $5,000 will often range from $35 – $50 for the year. Like anything else, the more you want, the more it costs.
Scheduled Items (personal articles)
Your home or renters insurance policy goes a long way toward insuring all of your possessions. Yet, there are limitations for certain things like jewelry, guns, or fine art, which you might want to address. You can do this by adding a scheduled items rider to your policy.
We covered how to insure your most valuable things in a previous article. Be sure to read that for a deeper review.
Many insurance policies only offer $1,500 for a fire-damaged engagement ring. Fur coats and guns will often have the same standard. Theft and misplacement are common exclusions as well. So, even if you are comfortable with the dollar amount, you might not like the limited ways it’s covered.
By adding your valuables separately, you secure better coverage for them. For example, you could lose your engagement ring in the ocean while honeymooning and still be insured.
An item’s value determines the dollar amount of insurance coverage you can buy. You can expect to provide the insurance carrier with evidence of value through an appraisal or receipt. Each carrier has its preferences regarding appraisals, so check with your agent.
Examples of things to schedule
- Engagement ring
- Wedding band
- Earrings or necklaces
- Watches
- Hearing aids
- Fur coats
- Any musical instrument
- Guns
- Golf Clubs
- Silverware
How much does it cost?
An increase in insurance means a price increase too, and that increase in cost will vary by carrier. As a guide, one or two percent of an item’s value is average. So, an engagement ring valued at $11,000 should cost about $165 annually to insure.
Underground service line rider
It might surprise you that you are responsible for the condition of all the pipes, cables, and lines beneath you, including the stretch between the street and your residence. Until recently, these were uninsurable, leaving homeowners to pay for the costly repair or replacement. Now, there is a rider you can purchase for added protection called the underground service line endorsement.
Examples of underground service lines
- Piping – gas, water, or sewer
- Electrical wiring
- Fiber optic wiring
- Cable and Internet wiring
- Telecommunication wiring
What it protects against
Unless you have x-ray vision, you can’t tell what’s happening to your buried service lines. You’ll be glad to know that this insurance rider covers leaks, breaks, tears, ruptures, collapses, and arcing when caused by:
- Wear and tear, marring, deterioration, or hidden decay
- Rust or other corrosion
- Mechanical breakdown or latent defect
- Weight of vehicles, equipment, animals, or people
- Vermin, insects, rodents, or other animals
- Artificially generated electrical current
- Freezing or frost heave
- An external force from a shovel, backhoe, or other types of excavation
- Tree or other root invasions
Unless…
… any form of earth movement caused those damages. Earth movement, including earthquakes, natural rising, sinking, or shifting of the ground, will negate the coverage afforded by the rider.
How much can I buy and what will it cost?
Like other riders, the amount you can purchase varies by carrier. Some insurance companies have not begun to offer coverage at all, and the ones who have, limit the amount available. When a carrier does offer the endorsement, it’s typical for it to start at $10,000 and max out at $25,000 in insurance coverage.
The typical premium for this rider is between $35 – $75 per year; some will not offer it if your house is more than 40 years old. Speak with your agent for further details.
Your insurance policy deductible will apply to any claims made from using this endorsement.
Ordinance or Law rider
Building codes and laws will change over time. When those changes occur, there are no modification requirements for existing homes. That is unless there is a loss of more than 50 percent of the house. When that happens, you’ll likely have to update the undamaged part of the building to rebuild.
Your insurance policy provides very little coverage for additional expenses you incur from having to bring the house up to date. On average, the insurance policy will provide 10% of the house’s insured value for this coverage. It can cost more than that alone to demolish and remove the undamaged portion of the home. Thus, you’d have nothing left to put toward the cost of rebuilding.
Most carriers provide an opportunity for you to buy more ordinance or law coverage. We recommend adding as much as possible if you have an older home.
Common code changes
- Electrical wiring
- Hardwired smoke alarms
- Plumbing
- HVAC
- Weather and fire-resistive building materials
It’s important to know what you might be responsible for should you lose most of your house to a fire. Knowing who to speak with about your property’s building codes is also essential. If you live in the Village of Baldwinsville, your codes could differ from someone two blocks over in the Town of Lysander. So, contact the appropriate code enforcement office when doing your research.
Guaranteed Replacement Cost
Does your house have enough insurance? Odds are it doesn’t. According to studies by CoreLogic, a property intelligence company, two-thirds of all U.S. houses are underinsured. That means an insurance policy is in place but has insufficient coverage to rebuild fully. The top way to prevent that is to add the Guaranteed Replacement Cost rider to your policy.
A house insured with guaranteed replacement cost is the gold standard for reconstruction coverage. When added, the insurance company agrees to rebuild your house regardless of its insured amount. As long as your policy covers the reason for the damage, you can disregard its insured value. However, if changes in building codes cause additional expenses, those will not be considered part of this rider. Yet another reason to consider the Ordinance or Law rider we’ve discussed.
Reasons that contribute to a home being underinsured
- Incorrect square footage
- Inflation
- Builder grade values applied to custom upgrades
- Structural improvements
- Interior upgrades like changing from carpet to hardwoods
- General remodels
Unfortunately, finding a carrier who offers it is not easy. That’s because, when added, the insurance carrier’s financial responsibility to you is more significant. A few, like Erie Insurance, offer this, but the list is short and isn’t growing fast. If you have the option to add this, we recommend considering it.
Taking the next step toward a more robust home insurance policy
You’ve now learned more about the cream-of-the-crop home insurance riders you should consider adding. From our perspective, all the riders are well-priced options. Yet, only you can say that for sure.
To see insurance quotes based on some, or all, of the riders discussed, tap the Get a Quote button below. For answers to additional questions, please complete our contact form below. Either way, one of our insurance pros will be happy to help you.
If you still have an unquenched thirst for insurance information, read “How to Get Homeowners Insurance.” You’ll find in-depth explanations of what you need to know about choosing a home policy.
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