The Power of Endorsements

Whether you rent or own your home chances are you have (or should consider having) renter’s or homeowner’s insurance. Generally these insurances cover you in the event of being liable for damages or if you suffer a loss of your own due to a fire, tornado, hurricane, etc.

What many polices do not cover or provide very limited coverage on is specific items such as jewelry, antiques, coins, firearms, etc. Generally if there is coverage for these items it’s for an aggregate amount not to exceed a certain dollar limit – such as $1,000 for the total amount lost.

For example, Herb has an extensive coin collection worth $50,000 and his wife Peaches has an engagement ring worth $10,000. Under their normal home policy, if there was a theft, fire or tornado causing a total loss of their coins and ring, they may only get up $2,000 (assuming the aggregate coverage amount was $1,000 respectively). This puts them at a $58,000 loss.

Both Peaches and Herb could have prevented this by adding an endorsement to their home policy. Think of an endorsement as an “insurance policy within the main policy”. Essentially an endorsement specifically covers an article of personal property that is either excluded or not fully covered in the main policy. With an endorsement, the owner can choose their own deductible for the loss and coverage is much more inclusive. This means that if the home policy deductible is $500, the endorsement can have a deductible for, say, Peaches’ ring for $100. So in this case, their loss would only be the deductible on the endorsement – a considerably smaller sum.

Additionally, many endorsements will cover mysterious disappearance. This means that should Peaches lose her ring washing dishes, it’s likely covered with the endorsement, something the home policy wouldn’t. Also, an endorsement supersedes and conflicting terminology in the main policy.

Generally, endorsements are an inexpensive way to broaden coverage under an existing policy. Should you have an extensive collection or an item of considerable value an endorsement may be worth considering.