An auto insurance endorsement, also called a rider, changes the original policy by adding, deleting, excluding or amending the wording that allows policyholders to customize their coverage to include their special protection requirements or reduce risks and premiums by excluding a high-risk driver or limiting the scope of the coverage. It may also be used to extend your vehicle insurance to items that are not normally covered like custom parts. An endorsement or rider takes precedent over the original policy wording.
You can have an endorsement added to your policy at the time of purchase or as and when you need mid-term. These changes usually affect your premium and if you make the adjustment mid-policy you may need to pay more. It is a common practice seen in other lines of insurance like home or life too.
Standard automobile insurance policies are designed to address the most common coverage requirements, typical automobiles and drivers. If you have a special protection need, high-risk driver or modified car, you would probably need to contact your agent or insurer to make adjustments to your policy in a way that is broadened to offer more protection or limited to reduce risks and save you money on premiums.
Here are some of the examples of vehicle insurance endorsements/riders;
- Driver exclusions are common in auto insurance that can be initiated by the provider or policyholder to reduce risks and costs by excluding a driver in your household by name from using your vehicle. Once they are excluded, they aren’t rated and therefore don’t increase your premium but you need to make sure that they don’t drive the car as they aren’t covered any more. This is often needed because standard policies include drivers in your household and rate them.
- Custom parts and equipment endorsements allow the additional work done to a car to be rated and coverage extended to include them.
- Business use inclusion on a private auto insurance policy is usually handled with an endorsement on the policy specifying that your vehicle will be covered when you carry out certain work-related tasks.
While some additional coverage may be handled by an endorsement by some companies, others may have a provision for them on their standard policies that it applies to you if the coverage is included in your policy declaration page. Otherwise it doesn’t apply to you.
Once added, an endorsement becomes a part of your car insurance and remains in effect as long as you keep the policy. So, your auto insurance provider will price it when they offer renewal terms and continue the coverage when the policy is renewed. You can also have an endorsement for a limited time period or can have it removed by contacting your agent or insurer.
Any diversions from standard auto insurance coverage are usually dealt with endorsements. They are often a good way of making sure policyholders and insurers are on the same page and the additional details clearly added to the policy. That means the company knows the special circumstances, priced them and included them in the coverage. This leaves no room for speculations or surprises at the time of a claim. And you need to make sure that you comply with the new terms.
So, you can always discuss these extras or unusual circumstances with an agent. It is best that they know everything clearly and it is written black and white on the policy documents to show it is the case. Otherwise, it can get complicated when you have a claim and they didn’t know about these cool gadgets you installed. They may refuse to pay for them and can even deny the whole claim if they deem that the accident happened because of a modification you have done like changing the engine to a bigger and faster one.