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Which Home Insurance Riders Are Best for My Needs?

PressReach - Fri Mar 17, 2023

Home insurance gives financial protection to you, your family members, your home, and other precious personal belongings should anything unexpected happen. Otherwise, you may risk paying hefty costs for damages, repair, and replacement of all your losses. 

The question is: is your insurance coverage enough? If not, then it’s time to invest in insurance rider cover. It provides additional protection to yourself, your loved ones, and your assets, especially if they’re sufficiently covered in your standard insurance policy. 

What Is An Insurance Rider? explains riders as optional add-ons to your standard homeowner’s insurance policy. They increase coverage limits, expand coverage, or extend protection for specific items and perils that are otherwise excluded or limited in your basic policy. 

Don’t confuse insurance riders with property endorsements and property floaters. While many may think they’re all the same, slight differences exist among them. Specifically, a rider policy is more like the umbrella term for any added layer of coverage that broadens your standard coverage. 

Two examples of a rider policy are a property endorsement and a property floater, both added to homeowner’s insurance. A property endorsement “increases” coverage for expensive jewelry or art collection. 

In contrast, a property floater “extends” coverages to specific items. For example, a policy can only cover $1500 worth of jewelry, but a policyholder owns a $1,500 necklace and a $1,000 watch. They can add two floaters to their current policy to extend the coverage of these twoitems.

Insurance riders aren’t limited to increased coverage for valuable possessions. There are various types of them, such as dread disease rider (expanded health coverage for dread diseases like a heart attack or stroke ) orfamily income benefit rider(extended life insurance coverage providing a steady flow of income to beneficiaries when the insured passes away). 

In this article, we’ll focus on homeowner’s insurance riders that you may need. 

Scheduled Personal Property Coverage

A standard homeowner’s insurance covers personal belongings stolen or damaged by natural disasters, such as fire and hurricanes. These covered possessions include stored off-premises, meanings you’re covered anywhere in the world. It also covers expensive items and collectibles, but there are usually dollar limits if stolen, lost, or misplaced. This is where scheduled personal property coverage comes in.

Scheduled personal property rider ensuresincreased or full coverage of high-value items, such as jewelry, furs, antiques, art pieces, silverware, and other collectibles. In insurance, “schedule” means “to list,” and “scheduled coverage” means “various insured items are specifically listed” in a policy. In this sense, scheduling valuable properties means scheduling (specifically listing it on your policy) for its full value, usually up to each item’s full appraised value. 

Water Backup Coverage

Water backup damages, including clogged sewer lines, backed-up drains, and failed sump pumps, are one of the most common yet overlooked parts to cover in homeowner’s insurance. Despite their out-of-the-pocket costs, most homeowners want to immediately fix them because they can flood their houses and carry various water-borne disease-causing materials with them, which can lead to more expenses.

Most standard homeowner’s insurance policies don’t cover water damages from a sump pump or backed-up drain. For that, you need to add a water backup rider to your basic policy. It may help cover the cost of removing water or replacing furniture, or after unexpected backup damage in your property. 

Its cost usually ranges from $50 to $250 per year, depending on the risk exposure and limits you’ll choose. While it may sound like another expense, it’s much more affordable than the possible costs you’ll pay for water backup cleanups and repairs. 

Building Code Coverage

The standard dwelling coverage in homeowners insurance can provide repair and replacement costs should any insured disaster damage your residence. However, it doesn’t cover the rebuild costs associated with complying with new building codes. These codes should be followed for health and safety purposes. Otherwise, you’ll likely be penalized by your local government. 

Not all homes must adhere to these code-compliant renovations. They’re typically applied to properties that aren’t up to current building codes when damaged. If you plan to move to an old, damaged property, it pays to invest in building code coverage before moving in, or the local government demands home renovations. This rider can cover the costs of complying with local building codes required for your home repair after a covered claim.

Business Property Coverage

If you run a home-based business or keep business-related items in your home, you might want to add commercial or business property coverage to your basic policy. This rider specifically protects a home-based business’s inventory, supplies, and computers, which aren’t usually covered by home insurance. Depending on your business nature and needs, you can increase or expand this additional coverage. 

Final Thoughts

Keep your insurance agents in the loop many times a year so they can help you find any coverage gaps that may develop or already exist in your current policy. More importantly, remember that whether or not you need a homeowner’s insurance rider depends on how much money you have and how willing you’re to take risks.

Featured Image: Pexels @ RODNAE Productions

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