What Are Riders in an Insurance Policy?

Imagine you’ve just inherited your great-grandmother’s diamond engagement ring—an art deco treasure holding the original stone and decorated with a beautiful, handmade filigree. With a standard homeowners insurance policy, chances are you may not have enough insurance to cover that ring. That’s because many basic homeowners policies have a $1,000 limit on jewelry. Fortunately, you can get a rider to cover its full value, once it’s been properly appraised.

Insurance riders give policyholders a way to customize their insurance, often at little additional expense, with riders available for life, homeowners and automobile policies. These riders, sometimes known as insurance endorsements, can provide a less expensive option compared to a stand-alone policy. Riders can also apply to specific conditions, such as the need for home business coverage or increased coverage limits. In some cases, they also exclude certain claims, such as canine liability (which relates to injuries or property damage caused by dogs).¹

Popular Life Insurance Riders

• Accidental death and dismemberment benefit, the most common death benefit rider, pays money beyond the regular death benefit to cover sudden, accidental death. It also covers accidental dismembermentandloss of sight,among other conditions.
• Accelerated death benefit helps you cover expenses related to terminal illness. You can use funds from your policy’s death benefits while still living to pay expenses such as medical bills. Any deductions, though, will reduce the amount of death benefits passed to your heirs.
• Term conversion rider allows you to convert term life insurance, which typically covers a specific number of years, to a permanent life insurance product later without the need for a medical examination. Young parents often choose this rider to protect their family’s future assets.

Popular homeowners insurance riders

• Scheduled personal propertycovers expensive pieces of jewelry (like your great-grandmother’s hypothetical engagement ring) for a higher amount than a standard insurance policy. Other popular items for this type of coverage include art and antiques, silverware and furs, and handwoven rugs.
• Business property coverage provides additional coverage if you run a business out of your home by covering the costs associated with replacing business equipment and products in case of loss or damage.
• Identity theft restoration coveragecan reimburse you for expenses resulting from stolen identity, including legal fees and the guidance of a credit repair counselor.

Popular optional coverage for automobile insurance²

• Accident forgiveness is an add-on that protects you from insurance rate hikes the first time you’re responsible for causing an accident.
• New car replacement coverage is optional insurance that will replace your late model car with the most recent model if your vehicle is damaged beyond repair in an accident.
• Rental car reimbursementwill normally cover most of the cost of a rental car while your own car is in the shop due to an accident.

There are many other riders and additional coverage options available, of course. Like all insurance products, these riders and optional coverage policies can offer you peace of mind. Most come with additional expense—some even with considerable expense. And there’s always the possibility that their costs can rise over time.

Still, read your basic insurance policy carefully. You may find you already have the coverage you need!

¹The canine liability exclusion exempts the insurer from any liability from injuries or property damage caused by your dog, although this provision can also appear in the basic contract.

²Automobile insurance uses the term “optional coverage” as opposed to “riders” to describe add-on insurance products.