In insurance, an endorsement can be an exclusion, addition, or any other type of change to the original terms of your insurance policy.
What is an insurance endorsement?
Insurance endorsements allow your insurer to change a standard homeowners or renters policy.
Endorsements are mainly used for additions, subtractions, and other updates to your coverage, but can also be used to clarify language or change administrative stuff like addresses or emails.
How endorsements are structured
Standard vs. non-standard endorsements
Standard endorsements refer to really common things people often change on their insurance policy (e.g. change of address or adding extra coverage for sewer backups). They’re kind of like templates, but for updates to your policy.
Non-standard endorsements either change these “templates” in some way, or come up with something new altogether.
Mandatory vs. voluntary endorsements
Mandatory endorsements are relatively rare, and refer to something that’s required. Read: there’s a law in your state requiring this change to your policy.
Voluntary endorsements are (as you may have guessed) not required – these are the most common types of endorsements you’ll encounter.
Common insurance endorsements, explained
While insurance is designed to protect you and your stuff, it certainly isn’t one-size-fits-all.
That’s where endorsements come into play – they can deal with just about any aspect of coverage.
While the two main types of endorsements are extra coverage for scheduled items (known as scheduled personal property, in insurance speak) and exclusions, we’re going to dig deeper and give you the run of a bunch of standard endorsements you should familiarize yourself with, especially if you’re a homeowner.
Personal property replacement cost endorsement
A standard insurance policy for renters and homeowners will most likely cover the actual cash value of your stuff (the eBay price) as opposed to the replacement cost (the Amazon price).
Having an endorsement for coverage on a replacement cost basis means that if you lose or damage something you own and it’s covered by insurance, you’ll get the full amount it’ll cost to replace it (including any sales tax!). Score.
Scheduled personal property endorsement
While insurance policies cover the things you own, there are certain limits on valuable items such as jewelry, bikes, fine art, and more. The limit in your policy may not be enough for you to replace them without a bit of financial strain. In other words, if your $10,000 piece of art is stolen, having a max of $1,000 in coverage just won’t cut it.
Bonus: when you schedule these types of items there is no insurance deductible applied on claims and accidental damage is covered.
Moral of the story? If you own anything of value, it’s a good idea to look into this helpful add-on.
Note: At Lemonade we refer to this type of endorsement as “Extra Coverage.”
Sewer backup endorsement
Insurance is meant to protect you from sudden and accidental things that could happen. Sewage backup certainly isn’t sudden – it’s something that usually builds up over a period of time, like other sewer problems that commonly plague homeowners.
That said, if you’re living in a city with known sewage issues, or if the previous owners mentioned something about the pipes, it’d be a great idea to look into this endorsement. It often costs only a few extra dollars per month, and could save you tons of $$ down the road.
To be honest, water damage is one of the most expensive things to fix and can often cause a ton of extra problems such as mold, mildew, rot, and more.
When the earth moves, you aren’t covered.
A basic homeowners insurance policy won’t cover any sinking, rising, or shifting in the ground. But for those of you in earthquake-prone areas, that’s where the earthquake endorsement comes in.
This coverage will definitely provide some extra peace of mind if you’re worried about your stuff being damaged in an earthquake.
Home business endorsement
With the gig economy live and well, freelancing is having its moment.
From graphic design to content creation, and from dog walking to fashion consulting, people are running business from their homes now more than ever. But if anything business-related is run out of your home, it most likely isn’t covered by your basic home insurance policy.
A home business endorsement will do the trick in most cases, covering you for up to 50% of what you’re covered for on your HO3 policy.