Many homeowners believe their insurance covers everything, only to find out during a claim that additional protection is often necessary for costly risks. These optional add-ons, known as home insurance riders, endorsements, or floaters, are crucial yet often overlooked, but they can save you thousands when unexpected events occur.
With the rise in natural disasters and aging homes, the importance of these riders has grown. Flooding accounts for nearly 90% of all U.S. natural disasters, building codes have become more stringent, and even minor tremors can damage structures not protected by standard policies. As high-value items, home-based businesses, and remote work become more common, reviewing your coverage annually is an essential step in financial protection.
1. Flood and Water Damage Insurance
Typical homeowners policies do not cover damage caused by flooding from external sources or water damage that is gradual. If you reside in a flood-prone area, having a dedicated flood policy is vital. In certain high-risk flood zones, you may even be required to have it. Given the increasing severity of flooding, more people are finding expanded flood coverage necessary. A water-backup rider adds protection against sewer or sump-pump backups and groundwater issues.
FEMA’s National Flood Insurance Program (NFIP) offers coverage averaging about $899 annually, with limits up to $250,000 for structures and $100,000 for contents. Private insurers may provide higher limits or quicker payouts, useful where rebuilding costs surpass NFIP restrictions. Notably, one-third of flood claims occur in areas not classified as high-risk.
Water-backup riders, costing between $50 and $250 per year, typically offer $5,000 to $25,000 coverage for issues like sewer backups. Insurers distinguish between “surface flooding” and “water backup,” making it important to verify how your policy defines each event. Installing backflow valves or backup sump pumps might even secure a discount on your endorsement.
2. Earthquake and Seismic Coverage
Earthquake damage isn't usually covered unless specific protection is added. For those in earthquake-prone regions, earthquake coverage may be a necessity. Even outside high-risk areas, ground tremors can affect your home’s foundation, plumbing, or structure. A seismic rider is a wise protection measure.
Major insurers offer earthquake coverage as a separate policy or endorsement, especially in California, Washington, Oregon, and parts of the Midwest. Deductibles range from 2% to 20% of your home’s insured value, so a $500,000 home might entail a $50,000 to $100,000 deductible. While substantial, this cost is often lower than potential repairs. Many endorsements include emergency repairs and debris removal, reducing immediate out-of-pocket expenses.
3. Building Code and Ordinance Upgrade Coverage
If your home requires repairs or rebuilding, it must meet current codes, which may not have applied initially. Without this rider, the costs for these upgrades would be your responsibility. A building code rider helps cover these additional expenses.
Given how fast building codes change – from insulation and wiring to plumbing and HVAC standards – these upgrades can add 10% to 20% to rebuilding costs, often not covered by standard policies. Ordinance or Law riders typically offer 10%, 25%, or 50% of dwelling coverage limits, covering code-mandated improvements. Even small fires can lead to updates throughout your entire home. Confirm that your policy includes “increased cost of construction” to ensure these expenses are covered.
4. Scheduled Personal Property for Valuables
Your policy likely limits reimbursement amounts for valuables like jewelry and electronics. If you possess high-value items, consider a scheduled personal property rider for individual item coverage at appraised values.
Policies often cap valuables at low sublimits (e.g., $1,500 for jewelry, $2,000-$5,000 for firearms, $2,500 for silverware). Scheduling provides “all-risk” coverage, including theft and loss. Premiums are typically $1-$2 per $100 of insured value. Appraisals every 2-5 years ensure accuracy, and many policies cover items worldwide, even during travel. Using a home-inventory app for documentation simplifies claims.
5. Home-Based Business Coverage
If you run a business from home, your current policy might not offer sufficient protection for work-related equipment. A business property rider increases coverage for inventory and equipment, with added liability coverage if clients visit your home.
Standard policies usually cover $2,500 of business property inside the home and $500 off-site, often inadequate for today’s home offices. A rider increases this to $10,000–$25,000, while separate home business policies add liability coverage. Post-2020 revisions may exclude “remote employees” from equipment protection unless an endorsement is included.
Riders are not just additional perks; they are strategic protections against large and unexpected expenses. With the evolving landscape of inflation, natural disasters, and building requirements, endorsements keep your coverage aligned with real-world risks. Review your policy annually, especially after significant purchases or changes. Keep digital records and consider bundling policies to save on premiums.
If you're curious about your current coverage and wonder if these riders could benefit you, don't hesitate to reach out.