Do I Need Endorsements on My Home Insurance Policy?
Your home is an important staple and your life, which is why it is so important to keep it—and everything in it—protected with the right home insurance policy. Unfortunately, not all home insurance policies are created equal, and many homeowners end up paying too much for policies that aren’t tailored to fit their home.
There are different ways to adjust your home insurance policy to match your specific needs and prevent an uncovered accident leading to a denied claim.
First, it is important to note what your home insurance policy covers and what you can add to cover your unique insurance needs.
What Home Insurance Covers
A basic home insurance policy comes in four parts:
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Dwelling Coverage : Dwelling insurance covers the physical home and its attached structures in case of damage due to fire, wind, hail, lightning, smoke, falling objects, explosions, vehicle collisions, vandalism and other incidents. A few unattached structures may be covered as well, such as sheds and separate garages.
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Personal Belongings Coverage : Personal belongings coverage provides compensation for loss of or damage to your personal items caused by fire, lightning, smoke, theft, vandalism and other incidents. This insurance can cover most objects inside your home and even a few you take off of your property, such as furniture, clothing, accessories, decorations, electronics and more. Certain items may have limited coverage such as jewelry, furs and art.
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Liability : Liability insurance covers bodily injury and property damage someone else may suffer on your home’s property. It can also cover damages and injuries caused by your children or pets off of the property. If your pet bites someone, for example, liability insurance can provide compensation for the victim’s medical bills as well as protect you in case of a related lawsuit. Legal costs a liability insurance policy may cover include defense costs, court fees and settlement expenses.
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Additional Living Expenses : Additional living expenses (ALE) help cover expenses related to temporarily moving if your home is rendered uninhabitable after a disaster. This includes hotel costs, food and more.
What Home Insurance Doesn’t Cover
Unfortunately, basic home insurance policies don’t cover everything. They come with a few exclusions in nearly every area. These exclusions include:
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Water and flood damage
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Homeowner negligence
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Jewelry, furs and art*
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Insect, bird and rodent damage
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Mold
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General wear and tear
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Certain pets (liability)
*As mentioned above, your personal belongings coverage should provide limited compensation for expensive items like jewelry, furs and art. In order to cover your expensive items completely, however, you may need an endorsement.
What is an Endorsement?
A home insurance policy endorsement, occasionally known as policy floaters, are additional coverages you can add to fill in the gaps left by your basic home insurance policy. Deciding if you need home insurance endorsements should depend on various aspects of your home, belongings and lifestyle.
Common home insurance endorsements include:
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Jewelry Endorsements : Jewelry endorsements allow you to extend the limited coverage for your jewelry under a home insurance policy. For example, if your engagement ring is worth $10,000 but your home insurance policy only covers $1,000, a jewelry endorsement can help bridge the gap.
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Water and Sewer Endorsements : Most water damage and sewer damage, such as burst pipes, is not covered under home insurance. Water and sewer policy floaters can help cover damages due to sudden and unexpected water or sewer issues.
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Replacement Cost Coverage : Most home insurance policies offer actual cash value for personal belongings, which means that you will receive compensation for lost or damaged items after accounting for depreciation. This means that as the value of your items goes down, so does the amount of compensation you may receive. You may have the option to purchase a replacement cost value policy, however. This type of coverage does not account for depreciation and instead offers compensation for the replacement value of your items.
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Umbrella Liability Insurance : Umbrella liability insurance fills in the gaps left by your home insurance’s general liability coverage. If your general liability insurance reaches its limit for a single claim, for example, umbrella liability insurance can help compensate for the remaining balance. This is especially useful if you have large pets or frequently hosts guests. Umbrella liability insurance can also fill in the gaps of your other liability policies, such as the liability on your car insurance policy.
Be sure to ask your insurance agent about how you can improve your home insurance policy through additional coverages and endorsements.
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