What Insurer Riders Should I Consider for My Property?

A basic home policy covers the loss or theft of possessions, property’s interior and exterior, and personal liability for harm to others. However, this standard coverage is subject to coverage limits and may include restrictions, exclusions, or sub-limits. 

That’s where a home insurance rider, also referred to as an endorsement, comes in. It provides increased coverage and improved protection for your property. The cumulative effect of these add-ons is to give you an increased sense of calm and security. 

Here are the most common home insurance riders you should consider: 

High-Value Items Coverage

Items with high market value can easily be stolen. That’s why a standard home insurance policy has a relatively low limit of liability for theft, typically around $1,500. In other words, if the value of your precious item exceeds the liability limit, the insurer won’t pay more than the amount mentioned in your policy.

There are two ways to improve the insurance protection of your most prized possessions at home.

The first is to buy a floater policy. It can protect you against financial loss from the damage or theft of your valuable items, such as jewelry, art and antiques, furs, rugs, and silverware. It also covers accidental losses.

For example, it’ll cover a wedding ring that fell down a kitchen sink drain or a high-end watch left in a hotel. 

It’s important to note a floater costs 1%-2% of the total value of your possession. For example, if your wedding ring costs $7,000, it’ll cost around $70 per year to insure. If unsure of your item’s value, have it professionally appraised before purchasing a floater. You can find an appraiser on your own, but it’ll be more convenient to ask your agent where to find a reputable appraisal firm.

Another option is to increase the liability limit of your current home insurance policy. Compared to a floater policy, it’s less expensive.

However, the amount you can claim may still remain limited for both individual pieces and overall losses. For example, the limit may only be up to $2,000 for the loss of each piece, with the overall limit at $5,000. 

Insurance companies might have different takes on this, so it’s best to ask for online quotes from each of them in advance. 

Water Backup Coverage

Water backup damages are among the most common household problems. These include blocked sewage lines, malfunctioning sump pumps, and backed-up drains, which may lead to flooding in your home and several water-borne contaminants. 

Another issue is that cleaning up and repairing water backup damage is highly expensive. Even worse, they’re not usually included in a standard home insurance policy. To spend less on these water damages, invest in water backup coverage.

Depending on your risk exposure and the limits you choose, the yearly premiums of water backup coverage vary from $50 to $250. These amounts are much more affordable than the costs of water damage restoration, which may range from $1,240 to $5,343 per service. Imagine how much it’ll cost to do multiple water backup cleanups and repairs in a year without a water backup rider. 

Building Code Coverage

If you have homeowners insurance, the repair expenses won’t be a concern. However, it’ll only provide rebuilding funds, not the extra expenditures associated with complying with new building codes. 

Building codes are the baseline specifications every residential and commercial construction must follow to safeguard everyone’s health and safety. They’re devised and regulated by the International Code Council (ICC).

Specifically, these codes adhere to mechanical, electrical, plumbing, drainage, heating, air, and ventilation requirements. In addition, they include structural support, roofing, foundation, and landscaping. They also come under disability-related regulations in some nations that recognize distinct impairments.

ICC regularly establishes new codes, but it isn’t needed to implement improvements each time. However, in the case of natural calamities and catastrophic destruction, your property must adhere to code-compliant renovations. 

This is particularly true if you’re residing in an older home. Before your local government demands home renovations to meet the most recent building regulations, it pays to invest in building code coverage. It covers the cost of code-compliant modifications to your home as long as a covered risk damages it. Otherwise, you’ll likely be responsible for paying them yourself.

Business Property Coverage

Consider adding a commercial property coverage rider to your policy if you operate a home-based company or keep business-related valuables in your house. This endorsement protects all home-based company assets, including inventory, supplies, and computers. You can add more protection depending on your demands and the type of business you’re running. 

Final Thoughts

Have annual check-ins with your agents so they can assist you in identifying any coverage gaps that may develop or currently exist on your current home insurance policy. Ultimately, remember that whether or not you need a house insurance rider relies on your budget and risk tolerance.

by Peter Sonner