How can you increase your coverage limits on a homeowners insurance policy?
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An endorsement is any change to your home insurance policy: typically the addition or removal of coverage. An endorsement is sometimes called a rider or a floater. Endorsements typically add protection for circumstances in which a typical policy excludes or limits coverage. For example, coverage for water or mold damage, or additional coverage for items like jewelry, fine art, guns, or electronics.
When considering a homeowners endorsement, think about whether you need the extra coverage. Without an endorsement, you could end up with too little coverage. Let’s explore the ins and outs of homeowners endorsements to ensure your home and your assets are protected.
Earthquake coverage is a common exclusion on homeowners policies. Given the amount of widespread property damage that occurs during an earthquake, many companies exclude coverage for earthquakes because of the financial risk. Depending on your location and insurance company, you might be able to add an earthquake endorsement to your policy.
The California Earthquake Authority is a major provider of earthquake coverage. You can talk to your insurance provider about adding an endorsement to your homeowners insurance policy.
If you live in a state that's vulnerable to hurricanes — usually coastal areas — your homeowners insurance might specifically exclude windstorm damage if your home is damaged by severe wind or a hurricane. While hail and wind damage is usually a named peril on a typical home insurance policy, insurance companies can choose not to assume the financial risk of extending this coverage to areas that are susceptible to hurricanes.
Depending on your insurer, you may be able to supplement your home insurance with a windstorm endorsement. If it's not offered as an add-on, a separate windstorm hazard insurance policy could be purchased. If you live in a state where hurricane deductibles apply, you would be responsible for that separate deductible if you want your insurance company to cover your windstorm or hail-related damages.
Can't find windstorm coverage or windstorm insurance? You may have options via state-run insurance programs, like FAIR Plans (Fair Access to Insurance Requirements) or a Beach Plan if you live in a coastal area.
This coverage raises the amount you will get for your dwelling coverage if the repair cost exceeds your limits. This is common after natural disasters in which the demand for labor and supplies drive up prices. Most companies will extend your replacement coverage 25% to 50% — but this can vary.
For example, a wildfire tears through your home and many others in California. Ordinarily, your home would cost $300,000 to rebuild but the increase cost of repairs due to the massive wildfire raised the total replacement cost to $370,000 — $70,000 more than your coverage limit. Without extended replacement coverage, you would be forced to cover that $70,000 difference. If you have 25% of extended replacement cost coverage, your unseen $70,000 would be covered.
Water damage is a tricky area for most insurance companies. A standard homeowners insurance policy covers water damage caused by:
Sewer backup coverage would be necessary if water were to overflow into your home via the home's plumbing system. This may occur because of a blockage, old pipes, tree roots, or construction issues. Because it may involve contaminated water, it can make your home unsanitary and damage your personal items.
Without this endorsement, you would have no coverage in the event of a sewer backup. Generally, this coverage isn’t too expensive. It may raise your homeowners premium by a few bucks per month.
Let's say your fridge is fully stocked but a weather event downs power lines in your neighborhood, causing your fridge to lose power for a few days and making your food rot. Because your power was cut due to a covered peril like a windstorm, having this endorsement ensures that your insurance company will cover the cost of the spoiled food. Power outages are generally the only kind of event homeowners insurance will cover when it comes to food spoilage — and it's up to the individual policy and insurer whether they'll cover instances where it's only your residence losing power versus your whole neighborhood. This endorsement could be helpful if your home is located in an area vulnerable to storms and power outages — especially if those outages tend to last longer than a day.
Most insurance companies limit their liability on certain valuable personal property items. Jewelry, fine art, and even firearms come with specific coverage limits, i.e., the most your insurance company will reimburse you after a coverage claim. Below are items that may incur homeowners insurance limits.
|$200||Money, gold, coins|
|$1,500||Jewelry, watches, furs||Theft-only|
As you can see, you have many limitations on how much you can be reimbursed for after a loss. Adding a personal property endorsement can increase the category of coverage. For example, if you increase your jewelry coverage by $5,000 via an endorsement, all your jewelry would be covered up to $5,000.
If you have one particularly valuable item of personal property, such as an engagement ring, consider a scheduled personal property endorsement. This would require you to appraise the item but would give you individual coverage.
If your dwelling — the physical structure of your home — were damaged or destroyed, you would be reimbursed on a replacement cost value. Your insurance company would pay a claim to cover what it costs now in order to rebuild or repair your home (up to your coverage limits). On a standard homeowners policy, your personal belongings are not covered this way.
Typically, contents and personal property are covered on an actual cash value basis (ACV). ACV considers depreciation whereas replacement cost does not. For example, if a couch you bought three years ago were destroyed, an ACV payout would give you the value of a three-year-old couch, not the value of a new couch.
If your contents are deemed a total loss, an ACV payout basis can leave you with less than you had before. Because of this, it is generally recommended to insure your personal contents on a replacement cost basis.
Identity theft coverage on a home insurance policy is usually relatively limited. It will not cover any reimbursement for stolen funds but can help cover court costs and reimburse for time lost at work.
With technology playing an ever-increasing role in our day-to-day lives, personal cyber security continues to grow in importance. Some home insurance companies— typically those protectinghigh-value homes— have an endorsement to cover a wide variety of cyber crimes, including cyber extortion, cyber bullying, and cyber fraud.
This endorsement provides coverage to you or your household members for personal injuries. This includes false arrests, wrongful eviction or entry, invasion of privacy, slander, and defamation. The personal injury endorsement goes beyond liability coverage to protect against any emotional damages that might occur, covering your defense costs and any potential settlement fees up to your policy's limits.
Mold is a tricky aspect of homeowners insurance. Sometimes, your homeowners will cover mold damage if it is caused by a covered loss. This coverage kicks in to cover the below:
Fungus and mold coverages typically max out at or near $5,000.
If your home is under construction and vacant, you risk having your home insurance dropped. In the eyes of an insurance company, there is too much risk associated with a vacant home and thus uninsurable. With this additional coverage, your insurance company would give you limited coverage to your dwelling coverage.
Dwelling under construction coverage can vary by insurance provider and the specific details of your home and construction.
Home daycare coverage is a homeowners endorsement provided by some insurers that allows you to operate a childcare business from your home. Under the endorsement, your liability coverage is extended to those in your care. Personal property coverage is also extended to cover your business property as well. To be eligible for this endorsement, the maximum number of children allowed to be under your care is typically capped between three and six. More than that and you would need to seek out a commercial policy.
Endorsements can help increase your coverage limits or add coverage back. Still, it’s important to understand what you and are not covered for — with and without endorsements. Our best recommendations for ensuring your home is properly protected is to speak to a licensed agent. They will be able to tell you all the endorsements and coverage items you might need based on your assets.
Call 888-444-2833 or click below to consult a licensed insurance agent.
This article was written by one of The Zebra’s insurance experts. Each article is thoroughly researched to ensure we provide readers the most accurate — and helpful! — information possible. That’s insurance in black and white.®