Insurance Riders: What They Are & Common Types
Homeowners insurance plays an important role in protecting you and your loved ones from the unexpected curveballs that life can throw your way. It’s a valuable tool, and one that no homeowner should go without.
But sometimes your homeowners insurance policy, on its own, won’t be able to provide all of the protection that you want or need.
That’s where homeowners insurance riders come into play.
Below, we explain what a homeowners insurance rider is and why you might choose to add one to your policy. We also walk through seven of the most common riders that you should be aware of and take a look at how adding a rider to your policy might impact your premiums.
What is a homeowners insurance rider?
In the simplest terms, an insurance rider is additional coverage that you purchase on top of what is provided by your homeowners insurance policy. They can be thought of as something like an additional insurance policy that offers extra protection. They’re also commonly referred to as endorsements, floaters, and add-ons.
Why add a rider to your homeowners insurance policy?
Most homeowners insurance policies provide four basic types of coverage:
- Structural coverage, designed to help you repair or rebuild your home if it is damaged or destroyed by a covered event
- Personal property coverage, designed to help you replace covered items in your home that are damaged or destroyed by a covered event
- Liability coverage, designed to cover medical and legal fees if someone is injured in an accident in your home
- Additional living expenses, designed to cover your living expenses if your home is made unlivable due to a covered event
Note: In the world of insurance, a covered event is any event that your insurance policy offers you protection from. Covered events may differ based on which insurance carrier you purchase your policy through, as well as the type of policy you carry and any riders you add. See more insurance definitions here!
Generally speaking, homeowners add riders to their insurance policies when their base policy doesn’t provide all of the coverage that they want or need.
With this in mind, insurance riders typically serve one of two purposes:
Some riders are designed to offer coverage against specific risks or perils that are not covered in your base policy. Flood insurance and earthquake insurance are two examples of riders that offer such protection.
Other riders are designed to increase your coverage limits beyond those in your base policy. Scheduled personal property would fall under this category of rider.
Whether you’re looking for protection against a certain risk or you simply want extra coverage, a rider can help you get there.
Common homeowners insurance riders
1. Flood insurance
What it is: A flood insurance rider (or standalone policy) is specifically designed to provide coverage against damage or destruction caused by flooding, which is not normally covered by standard homeowners insurance policies. Flood insurance covers your dwelling and personal property from damage or destruction caused by a flood. (Important: This does not include water damage caused by waterline or sewer backups.)
What it covers: Damage and destruction caused by flooding.
How much it costs: According to FEMA, the average cost of flood insurance nationwide is $700 per year.
2. Earthquake insurance
What it is: An earthquake insurance rider provides you with coverage against damage or destruction caused by earthquakes or tremors which, like flooding, is typically not covered by a standard homeowners insurance policy. Most earthquake riders include dwelling coverage, personal property coverage, and loss of use coverage.
What it covers: Damage and destruction caused by earthquakes and tremors.
How much it costs: The average cost of earthquake insurance, according to AAA, is $800 per year.
3. Water backup coverage
What it is: Water backup coverage provides you with coverage against water damage that is caused when a drain, pipe, sewer line, or sump pump backs up into your home. As with flood insurance, this coverage typically extends to your dwelling and personal property. (Important: This does not include water damage caused by flooding.
What it covers: Damage and destruction caused by water or sewage backup.
How much it costs: Water backup and sewer coverage typically falls somewhere between $50 and $250 per year.
4. Building code coverage
What it is: Building codes are constantly being updated. If you have an older home that is not up to the latest code and it’s damaged or destroyed, repairing or rebuilding it according to the latest building codes can become expensive — potentially pushing you past the coverage limits provided by your homeowners insurance policy. Building code coverage is a rider that covers the additional expenses related to repairing or rebuilding your home according to current building codes.
What it covers: The cost of repairing or rebuilding your home to current codes.
5. Scheduled personal property
What it is: Most homeowners insurance policies include coverage for personal property. But some homeowners may find that their policy does not include enough coverage for particularly valuable items such as jewelry, antiques, artwork, firearms, and other high-value items. Adding a scheduled personal property rider to your policy allows you to increase coverage for specific items. Some insurance carriers specifically market these as jewelry riders, antiques riders, artwork riders, etc.
What it covers: The cost of repairing or replacing specific items that are damaged, lost, stolen, or destroyed by a covered peril.
How much it costs: Because the cost of scheduled personal property coverage may be dependent on the value of the assets being covered, it’s difficult to nail down an average cost for this kind of policy rider.
6. Business property coverage
What it is: Homeowners insurance policies may only cover the cost of repairing or replacing personal property that is damaged or destroyed by a covered peril. This means that if you store business property in your home, as you might if you are self-employed or run a home-based business, the business property may not be covered. Business property coverage extends coverage to business property stored in your home.
What it covers: The cost of repairing or replacing business property stored in your home.
How much it costs: As with scheduled personal property coverage (above), the cost of business property coverage is highly dependent on the value of the assets being covered.
7. Identity theft coverage
What it is: Identity theft coverage is a rider designed to help you cover a variety of expenses related to identity theft. While coverage may vary by carrier, it can include credit monitoring services, legal fees, reimbursement of lost wages, credit remediation, and more. These riders are also sometimes called identity theft protection plans.
What it covers: Various costs associated with identity theft.
How much it costs: The average cost of identity theft coverage is between $20 and $60 per year.
Will adding a rider to your policy impact your premiums?
Yes. Because you are purchasing additional coverage, adding any rider or endorsement to your homeowners insurance policy will increase your premiums.
How much of an increase you’ll see can depend on a number of factors, including:
- Where you live: Certain regions are more or less prone to various risks and hazards, simply as a matter of geography. If your house is in a higher-risk location, you’ll likely see higher costs compared to lower-risk regions.
- Your unique risk profile: A number of other factors (in addition to region) influence how risky a carrier deems it is to insure your home against a particular hazard. Your prices will be heavily influenced by this risk profile.
- How much coverage you choose: As with any insurance policy, the more coverage you select, the more your policy will cost.
- Your deductible: Likewise, your deductible can also impact your premiums. Generally speaking, the higher your deductible, the less you will pay in premiums; the lower your deductible, the more you will pay.
Adding a rider to your homeowners insurance policy
Most homeowners opt to add a rider to their policy when they’re in the process of initially purchasing coverage for their home. That being said, it’s also possible to add a rider when you renew your policy, or even after your basic coverage is in effect.
Of course, it’s important to note that not all insurance carriers will offer all endorsements. If you’d like to purchase additional coverage through a rider not offered by your carrier, you can often do so by purchasing that coverage with a different carrier.
At Matic, our goal is to take the guesswork and stress out of buying homeowners insurance. We want to make it as easy as possible for you to purchase the coverage you need to protect yourself and your loved ones — whether that includes riders or not. Start by answering a few simple questions and you can have a personalized quote for an affordable policy.
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