What is an insurance rider?

An insurance rider, also called a rider, adds or changes the original coverage details of an insurance company. You can add endorsements to many types of policies, including business insurance and life insurance.

If you are a business owner who wants to modify and customize your insurance to mitigate exposure to risk and loss, you may want to consider business insurance endorsements. Here’s all you need to know.

What is an insurance rider?

Most insurance policies come with standard coverage detailed in the insurance contract, but there may be times when you want to add or change coverage. This is done with an insurance rider. You will usually pay extra to add a rider when you need to fill a gap in the stand-alone policy and customize your business insurance.

You can find endorsements on all kinds of commercial policies, including general liability insurance, commercial property insurance, and commercial auto insurance. How the rider affects policy coverage depends on what is missing from the stand-alone policy and what the rider says it will cover.

Point: Check with your insurer about available endorsements to see if they offer coverage that your stand-alone policy doesn’t include.

Why the advantages of riders?

The best liability insurance providers spend a lot of time, money, and thought in crafting a business client’s basic insurance contract. The primary contract consists of standard coverage and is usually static, meaning the insurance company won’t go line by line to amend or change an insurance contract to suit an individual client.

This is where the endorsements come in. Endorsements allow customers to make changes to provide more comprehensive coverage. The insurance company can also standardize the language of the runner.

When a business owner gets a rider for an existing insurance policy, they don’t have to look for new policies and new insurers. In some cases, the exact type of commercial insurance coverage they want is not available in the market, and the only way to get the coverage they need is through a rider.

By changing one policy rather than purchasing another policy, business owners save money on business insurance.

Did you know?Did you know? If you purchase a business owner’s policy, your coverage will include general liability insurance and business property insurance for a lower premium than paying for the two plans separately.

For what types of business insurance can you add a rider?

You can add endorsements to various insurance and commercial insurance policies. Business owners probably already need general liability, commercial property, commercial automobile, workers’ compensation, or business interruption insurance.

The carrier will standardize each of these fonts as a single line font. Then business owners can make changes to better protect themselves against losses by adding an endorsement.

Note that some riders actually eliminate the need for another policy, such as inland shipping riders for commercial auto insurance. If you buy the rider, one policy can cover two needs and save you money.

PointPoint: If you have commercial auto insurance, consider purchasing gap insurance, an optional insurance policy that pays the difference between the car’s depreciated value and what you owe.

How to change your business insurance with endorsements

As any insurance contract can be amended with endorsements, there are many options to consider. It is important to discuss with your insurer the endorsements available for the policies you purchase. Not all carriers offer the same selection of endorsements, so you may choose another insurance company.

Here are some examples of business insurance riders:

  • Commercial real estate endorsement: This is a type of inland maritime cover that protects commercial assets that are not stored in a fixed location.
  • Extension of complaint filing: This endorsement applies to claims-based professional liability insurance policies. It grants the policyholder additional time to file an insurance claim.
  • Specific real estate coverage: This rider expands commercial property insurance coverage to include items such as underground pipes, drains or fences that might otherwise be excluded.
  • Extension of Workers’ Compensation: This rider extends workers’ compensation benefits to casual employees that you are not required to cover.
  • Possible interruption of activity: This rider comes in when a supplier, partner, or primary customer shuts down, preventing your standard business operations from progressing.
  • Communicable disease rider: This endorsement covers losses due to infectious diseases. This would have covered business closures due to the COVID-19 pandemic.

Buy an insurance rider

Buying the rider is as easy as telling your insurer that you want to add specific coverage. Endorsements typically cost a few pennies compared to a brand new policy, making them an affordable and efficient way to add coverage.

However, when choosing business insurance, many business owners don’t know about endorsements and don’t think about asking for additional coverage, assuming the policy they buy covers everything they’ll need. This is not the case. Be sure to ask your carrier what their options are to see if any jumpers match your needs.

Depending on your business activities, some riders make more sense than others. For example, a contractor who is constantly moving tools from one job site to another must have coverage for commercial property that is not at a fixed location. They need to be covered wherever their job takes them and during their daily commute. A commercial property rider will cover these situations.

Likewise, a business that relies heavily on a specific supplier for the necessary production materials would be shut down if there was a supply chain issue. This is where contingent business interruption riders come into play.

Often times, one specific rider will make sense to you and your business, while others won’t seem as important. Business owners should speak to their insurance agent about the specific needs of their business and ask if there are any endorsements that would better protect their interests.

Did you know?Did you know? Some commercial insurance costs are tax deductible, such as general liability insurance, commercial auto insurance, cyber insurance, and health insurance.

Make a claim on a rider

One of the great advantages of a rider is that there is no extra work if you file a claim. As long as you pay your premium, the claims process is transparent and includes rider losses.

To make a claim, you must gather all the details of the loss and call the insurance company. The carrier will confirm your coverage, including the rider. Once the carrier confirms the rider, they will open the claim with the details of your loss. A claims adjuster, who determines the value of the loss, will process the claim and the business owner will receive payment.

Insurance rider faq

Here are some common questions about insurance endorsements.

What other types of insurance have endorsements?

Endorsements are not just for business insurance. There are standard endorsements in personal home, auto and life insurance. For example, a common home insurance rider is sewer and drain backup coverage. A typical personal auto insurance rider is accidental death coverage. Life insurance has many endorsements, including a waiver that pays your premium if you become disabled.

How much do insurance endorsements generally cost?

Endorsements are not free in most cases, although there are cases where an insurance company will add a rider for free to expand coverage or even meet state minimum insurance requirements. The cost of a jumper varies widely, but it is often only a few extra dollars per month. Carriers offer endorsements for less than monoline policies because there is less underwriting involved.

What is the difference between an insurance rider, a rider and a free float?

A rider and a rider are the same: they both add coverage to a policy for specific categories of needs. A float is similar in that it is added to a policy to increase coverage. The main difference is that a float adds coverage for specific items. Floating policies are most often associated with home insurance policies and often add coverage for items such as jewelry or artwork.

Are Business Insurance Endorsements Worth It?

Without a rider, a business owner can miss out on much-needed coverage. There is no feeling worse than having a claim that you think is covered by insurance that is not actually covered. Endorsements are worth their cost because they address specific use cases to limit your financial liability in common claims.

Earnest L. Veasey