Should You Buy Home and Auto Insurance Endorsements?

by Pauline Milner

Some home and auto insurance endorsements can save you money. Others can cost you. Use this article on your road to becoming a more informed insurance policy purchaser who only sees the savings.

Your auto and property insurance policies come with optional coverages called endorsements. Some of those additional coverages are well worth the extra premium, while others you may want to consider removing or refusing them when offered.

Water and Sewage Damage

Water and sewage entering your home as the result of a backed up pipe is generally not covered under your property policy. With the average damage being $7500, this coverage is well worth the expense of $25 to $50 per year.

Damage from flooding is not covered on your insurance policy. You may be able to purchase this insurance through the National Flood Insurance Program. To see if this coverage is available for your community, you can check FEMA.gov.

Damage from Earthquake and Sinkholes

Catastrophes like earthquakes are not covered and sinkhole damage is only covered in the state of Florida. US Geological surveys estimate up to 40% of all land in the United States could experience a sinkhole and earthquakes could occur anywhere. Adding this coverage will cost between $.50 to $1.75 per $1000 of insurance, depending on where you live.

Identity Fraud

Identity fraud is quickly becoming one of the most devastating forms of loss in the United States. For an average of $35 per year, you can add coverage to your property insurance policy, which is much less than the amount charged by most stand-alone companies.

Ordinance and By-Law Coverage

Ordinance and by-law coverage is available and will cover your expenses in the event your home needs to be rebuilt. If you have an older home or if the laws regarding construction have changed in recent years, you may want to be sure you have this coverage in case you need to rebuild part or all of your property in the event of a loss.

Policy Limits

All policies have limits on the amount they will pay if a loss occurs. For example, jewelry and fine arts could be limited to $5000 and computer hardware to $1000. You can purchase additional coverage for these items by increasing their limits. Additional charges are calculated on a per thousand dollar basis and vary depending on the type of item you need to insure. For example, increasing your jewelry coverage would cost an average of $10 per $1000 and fine arts $4 per $1000 of insurance.

Surprising Little Known Coverages

There are, however, some things usually covered by your property insurance that may surprise you. These include grave markers, meteorites, dog bites (to someone not residing in your home), your kid’s dorm room contents, and the cost of a lawyer if you are sued personally for libel or defamation.

Auto Rental Coverage

If your car is being repaired due to a claim that was your fault, the cost of renting a car can be covered for an average of $50 per year. Remember that your auto insurance will already cover the insurance on a rental, so you can save that expense whenever you rent a car.

GAP Insurance

GAP insurance covers some or all of the difference between what you owe on your car and what the insurance company determines your car is worth in the event of a write off. This is always an additional expense, but it may be well worth the charge since even a new automobile depreciates by about 30% the minute you sign the purchase agreement.

For example, you owe $20,000 on your loan and your car is calculated to be worth $15,000 after an accident. That optional GAP insurance you purchase could cover the $5,000 difference.

Costs for GAP insurance on your vehicle vary widely. However, adding this coverage to your auto insurance policy will be much less than purchasing it from the car dealer or adding it to your loan. In fact, it may be up to five times cheaper! Also, when you add GAP coverage to your auto insurance, the cost of the GAP insurance goes down as your vehicle ages. However, the amount stays the same if purchased from the dealer or loan broker.

Emergency Roadside Assistance

Emergency roadside assistance may be available as an addition to your auto insurance and cost as little as $25 per year to cover things such as towing, lockouts, and gas delivery. It is important to compare the coverage to that offered by an auto club to determine which coverage best suits your needs.

Medical Coverage

Check to see if your auto policy includes medical payments in the event of an accident. Coverages vary from state to state, but you can add coverage for between $2 and $37 a month, depending on the amount you choose. You and any other insureds on your policy are covered if an accident occurs outside your vehicle. This can be important for those who do a lot of walking or cycling.

It may take some investigation to determine if you have the appropriate coverage or no coverage at all. However, taking the time to do so now can save you possible financial devastation later.

Making a list of your insurance coverage questions and sitting down with your agent or broker to look at your options is well worth the time and effort involved. Every year, thousands of insureds find out they do not have coverage for a claim or they discover there are limits on certain items.

Use this article on your road to becoming a more informed insurance policy purchaser.

Reviewed July 2019

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