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Homeowners Insurance Endorsements: Explained and Common Examples

What Are Homeowners Insurance Policy Endorsements? 

Homeowner’s insurance policy endorsements are simply changes to standard homeowners’ policies. Even though homeowner’s insurance policies are designed to protect a person’s possessions, they are not all created equally. This one reason is why endorsements are so important. They guarantee more protection. They are often referred to as riders or floaters.

Purpose of Policy Endorsements

Voluntary endorsements are added to the homeowner’s policy at the request of the policyholder and can make changes to almost any aspect of coverage. They are intended to add an extra layer of protection that extends beyond the standard policy. Special, restrictive, blank or qualified endorsements alter the original policy. Without endorsements, some items or possible circumstances may not be completely covered. 

5 of the Most Common Policy Endorsements

1. Sewer Backup Endorsement

Most standard homeowner’s policies do not cover sewer backup damages, which can cause extensive water damage and be difficult to repair. Any sewer backup poses a health risk for families and must be taken care of immediately. An endorsement to cover the inevitability is not expensive and can prove very beneficial long term.

2. Flood Damage Endorsement

Many people feel that if they do not live in a designated flood plain, there is no reason to carry floor insurance. This can be a big mistake, because floods can occur anywhere at any time. Homeowners who live in flood-prone areas are required to carry extra coverage. Typical policies limit the amount of coverage for floods. These endorsements are extremely valuable.

3. Valuable Personal Property Endorsement

Personal property such as jewelry, computers, electronics, and expensive art is covered under a standard policy, but may not represent their full value. Standard policies set a total dollar value, which may not be enough to replace many items such as jewelry. An endorsement is needed to ensure full protection if they are stolen or lost.

4. Inflation Guard Endorsement

An inflation guard endorsement guarantees that the value of a home does not depreciate. This reduces the amount it is worth if it is destroyed by fire or natural disaster. This endorsement guarantees that the coverage increases every year to keep up with inflation. The initial cost for this protection can be pricey, but is well worth it when disaster strikes. 

5. Mold Endorsement

Most homeowner’s standard policies do not cover mold damage, but an endorsement can be added to cover such an event. The cost for such coverage depends on the area where the home is located. Endorsement premiums are higher in humid areas and in older homes because of the increased risk of mold formation.

Final Takeaway

It is important for all policyholders to review their coverage periodically to ensure that the coverage is adequate for their needs. Most policies will cover loss due to fire or other disasters. They also pay for repairs, medical payments and liability claims against the homeowner, but there are limitations. Endorsements provide updates to standard policies and are designed to protect from any exclusions in the existing policy.

Updated on April 17, 2020

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