What Is an Insurance Endorsement?

Insurance policies are contracts—and insurance endorsements are amendments to the contract that legally change the coverage provided in the policy. An endorsement, sometimes called an insurance rider, either broadens or restricts coverage and gives policyholders the freedom to customize their insurance for an additional cost at any point during the policy term.

How Insurance Policy Endorsements Work

Insurance policies are written on standardized forms that cover the most common risks policyholders face and list coverage exclusions. When policyholders need different coverage from what’s already provided, they can have their policies endorsed.

An insurance endorsement is a form that explains the coverage changes you and the insurer have agreed to. These changes include:

Adding coverage: This includes endorsing hired and nonowned auto insurance to a general liability policy, which is a commonly requested endorsement. Carriers like Next make it easy to quickly change coverage.
Naming additional insureds: An additional insured endorsement extends coverage already in the policy to people who weren’t originally included. This endorsement is common as a condition of a business contract.
Changing coverage limits: Policyholders can request higher or lower limits and sub-limits to protect their assets better.
Adding state amendatory endorsements: Many states have specific requirements for how insurance is handled, including what’s covered and not covered. State amendatory endorsements are government-required endorsements added to policies.

While the majority of insurance endorsements are voluntary, meaning either you or your insurer opted for the change, they can be mandatory. Mandatory endorsements are usually because the policy form doesn’t comply with state law.

Common Insurance Endorsements

Endorsements are an option for any type of policyholder and any type of policy: personal auto, homeowner’s, life, and small business. Below are some of the more common insurance policy endorsements for each category.

Small Business Insurance

If you’re a small business owner, you can use an endorsement to cover gaps in your insurance, like with stop gap coverage. Some of the endorsements below exist as standalone policies.

Inland marine: Extends coverage to business property when it’s stored at a site other than the listed location or while it’s in transit.
Equipment breakdown: Pays to repair or replace equipment damaged by internal malfunctions.
Equipment breakdown: Pays to repair or replace equipment damaged by internal malfunctions.
Business interruption: Covers lost revenues and some operational expenses if you have to pause business operations due to a covered claim. Most providers include this coverage in a business owner’s policy (BOP).
Communicable disease: Adds business interruption coverage for losses caused by infectious diseases.
Additional insured: Extends liability coverage to people who are not originally named in the policy. A provider like Next Insurance lets you add additional insureds online or through its app and share a new certificate of insurance.
Additional covered property: Changes a commercial property policy to extend coverage to locations originally excluded from coverage.

Did you know: The majority of small businesses who filed claims for business interruption due to COVID-19 had their claims denied because they did not have a communicable diseases rider.

Home Insurance

Like a small business owner, a homeowner can use an endorsement to increase their coverage when the standard policy is insufficient. Common homeowner’s insurance policy endorsements include

Scheduled personal property: Like all policies, homeowner policies have a set limit for personal property. This endorsement lets you insure specific items for their full value.
Home-based business: Homeowners usually exclude business activities from coverage or offer very minimal limits—and this endorsement can increase your coverage. Hiscox is a great provider for small home-based businesses that work at client locations.
Animal liability: Homeowners with pets, especially certain dog breeds, may not have liability coverage under their home policy.
Water backup and sump overflow: Water damage is a gray area for coverage with providers, but most policies don’t pay for damages caused by public utilities, so this is an endorsement to consider.

Life Insurance

For life insurance, many of the riders offered impact how and when the policy death benefits are paid out. Some of the most common life insurance riders are

Waiver of premium: Waives the required premium payments if the insured can’t work due to a disability.
Long-term care: Monthly payments if the insured requires long-term care.
Accelerated death benefit: The insured gains access to the death benefit if diagnosed with a terminal disease.
Accidental death benefit: Pays an additional benefit if the insured suffers a fatal accident.
Term conversion: Allows the insured to convert a term life policy into permanent insurance at a designated policy milestone.

How To Get an Insurance Endorsement

Endorsements can be purchased from the provider or through an agent, and many endorsements are offered during the quoting period. However, if you identify a coverage gap after purchasing the policy, you should reach out to your agent or the carrier to discuss options.

Since an endorsement becomes part of the policy, it typically remains in force for the length of your policy. However, there are some endorsements that alter coverage for a limited type, such as temporarily insuring a second location.

Tips for Getting Insurance Riders

Before adding insurance endorsements and increasing your insurance premium, take the time to review these three tips.

Consider your risks: A standard insurance policy is designed to offer broad coverage to the most common situations. Is the policy offered sufficient for your business? Look at the endorsement and what it covers and then decide if it applies to you and whether it’s worth the extra cost.
Ask what your other policies cover: If you have multiple policies, you may not have any coverage gaps. For example, some insurers include inland marine coverage automatically in their property policies for professions like for handypersons. If that’s the case, then you don’t need to add a similar endorsement to your commercial auto.
Learn about time frames and qualifications: Providers have limitations on purchasing a policy. For example, you can’t purchase a standard policy to cover an event that has already happened. Life insurance usually requires medical exams before approving the policy. Know what the expectations are when looking into purchasing an endorsement.

Bottom Line

Insurance policies don’t cover every possible scenario, and insurance endorsements are a way to purchase extra insurance for your business or home. Review what standard insurance forms cover and look for endorsements that meet your risk needs.