What Is an Insurance Rider?

What Is an Insurance Rider?

Insurance exists to protect you or your property in case of loss, injury or damage. But insurance policies don't always include every type of coverage a person might need or want. An insurance rider (also sometimes called an amendment or endorsement) is a way to customize an insurance policy to get the exact coverage you need above and beyond what the basic policy offers.

For example, if you live in an area prone to flooding, your homeowners insurance might cover the basic structural damage from the flooding itself—but it might not cover the issues that appear after the flooding. After a flood, you might need help replacing important items (such as furniture, appliances and other valuables) or even loss of income from taking time off work to deal with the issue. In this case, an insurance rider could protect you beyond the structural issues by safeguarding your possessions and income too.

Benefits of Insurance Riders

Here are the most common benefits of adding riders to your insurance coverage:

• Personalize your coverage: Riders let you customize your policy to your specific needs, covering risks beyond your basic protection.
• Avoid financial catastrophe: Riders help avoid potentially huge costs associated with surprise events.
• Increased coverage limits: If you have treasured family heirlooms or other things you consider higher value, insurance riders act as an extra shield, providing more financial protection.
• Compliance with loan requirements: Sometimes lenders require you to have specific riders to approve you for a loan.
• Peace of mind: Knowing you have comprehensive coverage for potential risks reduces stress.

The cost of insurance riders varies by insurance company, the type of insurance, the type of riders you add and the policies themselves. You can expect to pay anywhere from a few extra dollars per month (to include roadside assistance for auto coverage, for example) to hundreds more per year (for a return of premium rider for term life insurance, for example).

Life Insurance Riders

Life insurance policies are designed to protect loved ones in the event of the insured person's death. They're particularly vital if you have people who rely on you financially. Here are a few of the most common life insurance riders:

• Accelerated death benefit rider: Gives you access to a portion of your death benefit while living if you are terminally ill.
• Waiver of premium rider: Pays your premiums if you become disabled and unable to work.
• Guaranteed insurability rider: You can purchase additional coverage without a medical exam later.
• Term conversion rider: Enables you to convert a term life policy to a permanent life policy later.
• Return of premium rider: Refunds some or all of your premiums if you die from natural causes.
• Level premium rider: Keeps your premium the same even as you age.
• Child term rider: Provides temporary life insurance coverage for your children.
• Family income benefit rider: Gives extra income to your beneficiaries for a set period.
• Accidental death and dismemberment rider: Provides additional benefits if you die or lose limbs in an accident.
• Long-term care rider: Helps cover the costs of long-term care if needed.

There are other types of riders as well. For example, if you're the primary breadwinner in your family and your partner stays at home with young children, adding a spousal insurance rider might make sense. This way, if they pass away, you'd get a death benefit that covers child care and all the other work they do at home. While the rider will add to the cost, in the event of your partner's death, hiring an ongoing child care provider, chauffeur, laundry service and all the other roles the spouse covered at home would be much more expensive.

Research these and other riders with any insurance company you're considering.

Home Insurance Riders

Home insurance riders can provide critical protection for you in many ways. There are a lot of riders out there for home insurance, but here are some of the most common:

• Scheduled personal property: Covers high-value items, such as jewelry, antiques, collectibles or artwork, beyond standard limits.
• Valuable items rider: This is similar to scheduled personal property, but often with a lower coverage limit and larger category (like pricey electronics).
• Identity theft recovery: Provides assistance and financial support in case of identity theft.
• Earthquake: Covers damage caused by earthquakes.
• Flood: Protects against flood damage, but may not include all types of flood expenses.
• Water backup: Covers damage caused by backed-up sewer lines or drains.
• Pet liability: This covers medical expenses or legal fees if your pet injures someone else.
• Homebased business insurance: Covers equipment and injuries for business run out of your home.

Auto Insurance Riders

If you drive and operate a vehicle, you'll likely need car insurance coverage. Here are some standard auto insurance riders to consider:

• Guaranteed asset protection (gap): If you total your car or it's stolen, a gap insurance rider helps pay off the auto loan.
• Accident forgiveness: Ensures that if you cause an accident, your car insurance rate won't increase.
• Roadside assistance coverage: Covers costs like towing when your car breaks down.
• Ride-share coverage: If you work for a ride-share service like Uber or Lyft, this rider acts like a bridge, filling in the gaps between your personal car insurance and what the ride-share company offers when you're working.

How to Add Riders to Your Policy

While some insurance companies include a few common riders for free, most riders come at an additional cost. So before requesting a rider from your insurance company, take stock of your needs, lifestyle and budget. After that, the process is pretty simple:

1. Research available riders. Contact your insurance agent or review your policy documents to understand the riders available for your specific policy type. Research each rider's benefits, limitations (some have eligibility requirements) and costs.
2. Get organized. Be prepared to answer questions about your circumstances and risk factors. For example, you might need to undergo a medical exam or the insurer might want to know the value of your belongings if you plan on covering them.
3. Contact your insurance agent. Get in touch with your insurance agent so they can give you more details, do the math on the additional premium cost and guide you through the application process.
4. Review and approve coverage. Look at the rider application or endorsement form carefully and make sure all the information is correct. Once it's submitted, your agent will handle the approval process with the insurance company.
5. Pay the additional premium. After approval, pay the additional premium for the rider(s). Look for confirmation from your agent that the rider has been officially added to your policy.

The Bottom Line

Insurance policies for your life, home or car cover certain things, but sometimes you need a bit more. Insurance riders can help you protect what you care about by customizing your coverage. If you decide to add on insurance riders, consider your needs, shop around and compare rider options from different insurance companies to find the best value. Then, rest easy knowing you've made strides to protect your financial future.