Essential Home Insurance Riders: Are You Covered?

Many homeowners mistakenly believe their insurance policy covers everything. However, they often discover gaps when they need it most. Optional add-ons, known as home insurance riders, can cover those gaps and save you money during unexpected events.

With increasing natural disasters and aging homes, these riders are becoming crucial. Flooding, part of 90% of US natural disasters, alongside stricter building codes, means additional coverages are essential for adequate protection.

1. Protect Against Water Damage

Standard policies typically exclude flood damage and certain water damages. For those in flood-prone areas, a separate flood policy becomes vital. Even outside high-risk zones, with rising flood incidents, more comprehensive coverage is advisable. Consider a water-backup rider to protect against sewer or sump-pump backups.

The Federal Emergency Management Agency's National Flood Insurance Program (NFIP) offers flood insurance averaging $899 annually, covering up to $250,000 for structures and $100,000 for contents. Private insurers may provide higher limits and quicker payouts. Water-backup riders, costing $50–$250 annually, can cover additional water-related issues. Installing preventive measures like backflow valves might offer discounts on these riders.

2. Earthquake Protection

Earthquake damage is often not included in standard coverage without a specific rider. Even regions with minimal seismic activity can experience costly tremors. Adding a seismic coverage can protect you against ground-related damages like foundation or plumbing issues, especially in earthquake-prone areas like California, Washington, and Oregon.

Typically, deductibles range from 2%–20% of your home's insured value. While deductibles may seem high, repair costs can be even more substantial. Many plans also cover emergency repairs and debris removal after an earthquake.

3. Building Code Coverage

Rebuilding a damaged home often means meeting current building codes, which can skyrocket repair costs. A building code rider covers these additional expenses, crucial for complying with modern standards for insulation, wiring, plumbing, and more.

This rider can cover 10%–50% of your dwelling's coverage limit, offering substantial protection for necessary upgrades following a minor incident that triggers comprehensive updates.

4. Protect Valuable Possessions

Standard policies have low limits on valuable items like jewelry or electronics. If you have high-value possessions, a scheduled personal property rider is essential. It allows you to insure these items at their appraised value, offering comprehensive risk coverage.

Valuables are usually covered at lower sublimits, but scheduling them can provide "all-risk" coverage. Expect to pay around $200 annually to insure $10,000 worth of jewelry, with worldwide protection included. Regular appraisals ensure your coverage remains accurate.

5. Home Business Considerations

If you operate a home-based business, standard policies may fall short in covering business-related equipment or liability. A business property rider can increase coverage for inventory and equipment significantly. Additionally, it provides essential liability coverage if clients visit your home.

Post-2020, policy amendments may exclude remote employee protections, making endorsements more vital. Besides business property riders, consider adding protection for business interruptions, cyber threats, or inventory coverage, particularly for businesses involving physical goods.

The right insurance riders aren't just extras; they're a strategic part of comprehensive protection, adapting to inflation, disasters, and evolving building standards. Reviewing your policy annually ensures alignment with your needs and can prevent major financial surprises.

If you want to explore which riders might suit your needs, feel free to reach out to us at any time for a personalized review.