December 7, 2015

Most popular endorsements to a home insurance policy

What are the most popular coverage endorsements that may be added to a homeowners insurance policy?

Why should I consider these insurance endorsements?

The way a homeowners insurance policy works is that the you the consumer choose the policy that you want and modify it with your personal information and then add certain amendments (called endorsements) to the policy to change it in certain ways to reflect how you would like the exact coverages to be.  Using home endorsements properly has long been known as the way a good insurance agent (or broker) becomes of value to his or her clients.   Below are some of the most common, useful, and most popular endorsements that are widely available.  Please note that not all insurance companies will carry all of these endorsements options:

Popular Endorsements:

Loss Assessment – this endorsement is most commonly used in condominiums and occasionally in Home Owners Association.  I cannot more highly recommend an endorsement than this one for condo owners.   If your Master Condo policy suffers a covered loss and the resulting amount of damage is more than that Master Condo Policy, then your loss assessment endorsement may cover you in the event that a loss assessment is levied against you.  Loss Assessment coverage typically has its own sub limit.

Scheduled Personal Property – (also called a Floaters) for items of a high value nature such as: Art, China, Furs, Guns, Jewelry, Musical Instruments, Rare Coins, Silverware, Stamps (collection), Wine, and sometimes Computers and or other electronics.   This is really only a partial list and much depends on the actual insurance company and their definitions.  Consult your own insurance policy and agent for a complete list.    When you get your insurance policy, read it yourself to review the items that would need this type of coverage.  If you have any single items worth more than $500 or $1,000 than you really should inquire with your insurance agent about the need for this type of coverage. Scheduled Personal Property coverage typically has its own sub limit and deductible.  In particular, the one thing that comes to mind as most often needing to be insured is a typical modern engagement ring.   Scheduled Personal Property coverage is greater coverage than typical property coverage.

Replacement Personal Property Coverage is standard for a few insurance companies

Personal Property Replacement – this endorsement covers your personal property for full replacement value (what you will likely have to spend) vs what it is worth.  Take your dining room table that is ten years old.  You bought it at pottery barn for $1,500 lets say.  What is it worth today after the kids have stained it with markers and Fido can chewed on the legs?  maybe $200.  God forbid if your home were to burn down, some insurance companies would just give you a check for $200 for that table and  you would be left paying for the rest out of pocket.  Practically speaking Personal Property Replacement is somewhat standard on some good home insurance these days and this is probably something that you should look for when shopping for insurance and less something you should look to add on.

Backup Sewer and Drain and Sump Pump – typically two coverages together.  First if your sump pump goes down and your home floods, you will be covered (usually there is a pretty low cap on this though, say around $10,000).  Also if your sewage line becomes clogged and runs into your home you will be covered (under the same cap as previous).   I like to call this endorsement, the “Welcome to your New House Endorsement.”  Why?  When you buy a new home you are very unlikely to know the conditions of the sewer lines and laterals in your home. Coverage for this is dirt cheap in my opinion.   Use it for a few years while you get used to the property and dump it over time as you learn about your sewage and plumbing.  Back Up Sewer Drain coverage typically has its own sub limit.

Mortgage Clause – This is a standard endorsement that will allow your mortgage company to have certain rights in the event of an insurance claim and or payout.   If you are buying a home and have a mortgage your bank typically will not allow you to close on the property until they see evidence that they are listed on your insurance information.

Personal Injury – Personal injury endorsement would cover you from libel, slander, malicious prosecution, wrongful eviction, invasion of privacy, and wrongful entry.    Personal Injury is a necessary add on for those wishing to have wider liability protection.    Personal Injury coverage can work in tandem to some extent with your Umbrella Policy.

Personal Injury protection is necessary for wealthier clients

Inflation Guard – Inflation guard protects your Coverage A coverage amount from being too little in the event of inflation eating away at your building coverage amount.

Extended Rebuild Endorsement – The Coverage A amount that you select can (and should be) enhanced with an additional amount of rebuild coverage due to a variety of factors.   A typical California HO3 Homeowners Insurance policy will contain a minimum of 25% of this coverage, sometimes a 50% additional amount is preferred.   The extended rebuild endorsement will really come in useful in the event of what is called Demand Surge.   I personally find that Extended Rebuild Endorsements are misunderstood for consumers and agents alike.

Increase in Ordinance and Law  Ordinance and Law coverage works hand in hand with your extended rebuild endorsement amount to provide additional Coverage A ‘coverage’ in the event that local ordinances or laws require to fix items in your home that are not damaged by a covered peril.   Confused?  Think about a water leak in your bathroom that ends up (by city code)requiring you to replace a large majority of plumbing found outside the bathroom.   That additional work that the City of Tiburon may require would typically NOT be covered by an unendorsed policy.

Limited Fungi and Bacteria / Mold – Increased Mold coverage or Covering Mold coverage is one that has gained increased use in and around Marin County due to water infiltration issues over time.  The coverage endorsement can be more for property coverage or for the liability associated with it.  Mold remediation can cost way more than many imagine.   This is a normal add on for many of the homes in Marin County, especially Mill Valley.  Please see a short IRMI article about mold claims entitled:  Mold is Gold.

Home Based Business –  If you own your own business or are a part owner, you should let your insurance agent know immediately to discuss your options.  You may find that a separate insurance policy may be the best solution for you, it can pay to shop around.  As a homeowner you should be aware that a typical homeowners insurance policy DOES NOT cover any business property or liability.   There are multiple options available to professionals whose business is based from their home.  More about Home Based Businesses.

Earthquake- Earthquake Insurance can be either added as an Endorsement to your existing homeowners insurance policy OR sold as a stand alone earthquake policy from another carrier such as Geovera or ICAT.  I recommend to my clients to get a quote from your existing carrier as well as an independent insurance company as well – this may allow you to save some money.   The peril of earthquake is not covered by a typical homeowner policy.

Please Contact Marindependent for an Insurance Quote

 

Less Common Endorsements:

Identity Fraud, Vacant Home, Incidental Farming , Additional Resident for Student,  Canine Liability Exclusion, Increased Personal Property located at Storage Facility, Increased Business Property, Mobile Home Endorsement, Other Members of Household,  Increased limits for Other Structures on property, Owned Golf Cart, Owned Snowmobile, Personal property at other residences, Refrigerated property coverage, Residence Held in Trust, Sinkhole Collapse, Special Computer Coverage, Watercraft, Additional Insured -Student Living Away.

Notes:

As stated above the peril of earthquake is not covered under a typical homeowner policy without the earthquake endorsement.  The peril of flood is also not typically covered as well as numerous other perils – please speak with your insurance agent about your insurance policy and coverage.  It is always recommended that people read their insurance paperwork to better understand what is and is not covered.  Please read out disclaimer.   Reading about insurance is not the same as speaking with a broker or insurance agent that is licensed in your area and community.

Of Additional note is that some/many of these endorsements listed here are more common on the regular policy form  with some of the Affluent Insurance Carriers.   Ask your agent to see quotes from an affluent carrier when speaking with them.

This is partial list and not exhaustive.  All insurers will have their own list and there will more in some situations and less options in others.  Reading about Insurance is good for understanding but should not prevent you from speaking with a licensed insurance agent.  In the United States, Insurance is regulated by the individual States and their various departments of insurance.

 

Marindependent Insurance Services LLC – 0K10734 – Independent Insurance in and around Marin County, California, USA.

Marin- Mill Valley – Sausalito – Tiburon – Larkspur – San Anselmo – Kentfield – San Rafael – Novato – West Marin – Corte Madera – Fairfax

Scott W Johnson – 0H11625