In today's world, everyone can afford an insurance policy. Seeing this growing amount of consumers, Insurance companies created standard policies with common types of coverage everyone can avail. This reduces the premium and attracts more consumers. For example, policies don't include home business coverage, since many people don't run home businesses at all. For such people it is useless to pay a premium for what they are not involved in. However, if someone does run a home business it would be a loss without this coverage. This is where the concept of endorsement comes in. An endorsement, or riders, is the modification of the common insurance policy to add or remove provisions according to the costumer's requirements. More than 100 endorsements are available for a standard homeowner's policy, but the most common ones are described below:
1. Inflation Guard Endorsement: Most insurance companies refuse to agree to pay the complete replacement cost of your house, until you insure your house for a minimum of 80% of its market value. To avoid this problem and to satisfy both parties of the policy, insurance companies offer an inflation guard endorsement. If you purchase this endorsement, you can increase your total insured amount periodically, according to a rate set by you. This percentage increase rate can range from 4% to 6%. With time, your insure amount would slowly reach up to the value of your house. This endorsement not just applies to your house, but also to all the property mentioned in the Coverage A section of the insurance policy.
2. Scheduled Personal Property Endorsement: You may have some unique property, such as musical instruments or jewelry, whose value is difficult to measure. These properties usually end up having coverage lower than what they are worth. This can ward off potential customers and to avoid this, a scheduled personal property endorsement is provided by companies. By buying this endorsement, you can get coverage for specific property at an amount decided by you and the company. This is usually an open risk policy. That is, it pays for direct loss, except if it is excluded specifically from the policy. This kind of an endorsement allows you to get a full payment on total loss that is equal to the amount you insured it for. For example, if your property was insured for $10,000, the insurance company would pay you the complete $10,000 in case of a total loss, without deductions, deductibles and depreciation.
Apart from these two, there are many other endorsements which you can purchase for your insurance policy. Endorsements modify and tweak your home insurance policy to make it personal and more profitable for you. You can consult insurance companies about the various endorsements they offer and select what suits your requirements.