A homeowners insurance policy is often times sold to us with very few endorsements. To an insurance agent, added coverages (extras) are called endorsements. To a consumer that prefers we speak English, it's additional coverage for a ring, earthquake coverage, or replacement costs on our contents (a basic homeowners policy has replacement cost on the home, cash value on the contents) just to name a few.
According to Google, an endorsement is a clause in an insurance policy detailing an exemption from or change in coverage
As an insured, the person paying for coverage, we rarely know if we have the appropriate endorsements.
Well, I've never not had what I needed. I've always been paid for my claims.
How do you know? You may have received a check, but was it as much as it should have been? What if there was a vanishing deductible endorsement that you didn't have? Most homeowners have a $1,000 deductible. You'd be out a thousand dollars, all the while thinking you were being taken care of.
What about increased coverage on jewelry and guns? They're limited in the event of theft.
They aren't limited so much on my policy. I've increased my coverage amounts. Here's how it's resembled on my dec page:
I don't think we should add every endorsement to our homeowners policy. Kelly and I would love to drive the nicest vehicles with all the bells and whistles. We can't afford it, so we pick and choose the amenities that are most important to us and cost affordable. Same goes with homeowners insurance. There are certain coverages I intend on being without (I'll paraphrase their explanations):
- Permitted Incidental Occupancies (business at the home): increases coverage on certain business property
- Loss Assessment: if you're a member of a POA and the POA is sued, you're sued, plain & simple. Loss Assessment helps pay that lawsuit if found guilty
My POA has no swimming pool, no common area, no playground, and only a handful of homes. I'm not paying for more than the $1,000 coverage that comes with my policy.
- Ordinance or Law: this coverage pays increased costs of damage repair due to city codes
- Water Back Up and Sump Discharge or Overflow: provides additional coverage if your sewer backs up in your home. It happens, even if you're on city sewer & water. You policy provides no coverage without having this endorsement.
I've seen the city cause this problem and then hand over a $1500 check for repairs. It's never enough. You'll need $5,000 - $10,000 or more depending on your square footage.
- Personal Property Replacement Cost: think of vehicle coverage on a 2002 Toyota Camry. If it's totaled we'll get approximately $4200. That's Cash Value. That's the type of coverage your basic homeowners policy comes with. Adding Personal Property Replacement Cost would get you a new, brand spankin' new, Toyota Camry.
You most likely can't get replacement cost on used cars or any car older than 2 years. This example makes it easier to understand how the coverage works on your contents.
- Increased Coverage on Personal Property: this is what I have on our guns and jewelry. If I had an alarm system, a security system on my home, I most likely wouldn't pay for this added coverage.
Your dec page should show the endorsements you have. They are also listed in the back of your policy, typically short & sweet and each on it's own page.
Don't get caught up buying every endorsement known to man. Pick and choose, and pay for what you need - what would cause you the biggest loss in the event of a claim.
Here are some endorsements. Don't hesitate to email me if you want deeper explanations regarding their coverage.
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