- In many states, homeowners insurance is set in tiers.
- Endorsements add specific coverage for your valuables.
- Personal liability coverage is a must if you have a high net worth.
10 Homeowners Insurance Endorsements You May Need
Basic homeowner’s insurance is a package policy that combines several types of insurance coverage into a one policy. Insurance companies typically bundle four types of coverage in a homeowner’s policy. These include:
- Dwelling and personal property
- Personal liability
- Medical payments
- Additional living expenses
The above list varies by state. In some states, homeowner policies are called home insurance forms and use the codes found in the Package Forms table below as shorthand to describe the coverage provided. Some insurance agents use these codes when selling insurance, so refer to this table to get a basic understanding of the jargon you may hear:
| Package Forms | |
|---|---|
| Form Code | Typical Coverage |
| HO-1 Basic Form | • Smoke • Glass breakage • Windstorm or hail • Vandalism & malicious mischief • Explosion • Theft • Riot or civil commotion • Volcanic eruption • Aircraft crash |
| HO-2 Broad Form | • HO-1 plus… • Falling objects • Weight of ice, snow or sleet • Accidental discharge or overflow of water from plumbing • Sudden & accidental rupture of a heating, air conditioning, fire protective sprinkler, or hot water heating system • Freezing of plumbing or related systems • Accidental damage from electrical current |
| HO-3 Special Form | Broad coverage that includes comprehensive coverage of home and contents with the exception of exclusions listed in the policy. Varies by company, and is almost always more expensive than HO-1 and HO-2. |
| HO-4 Tenants Form | Insurance for people renting or leasing a home or unit in multi-family dwelling. Usually equivalent coverage to HO-2. |
| HO-6 Condominium Form | Covers everything "inside the paint" of a condo not covered by the association’s insurance policy. May include personal liability coverage. |
Typical coverage found in homeowner’s insurance policies. Source: Bills.com
The descriptions above are typical, but may be different for your state and your insurance carrier. Therefore, read the policy to understand what you are being offered before buying. Ask your insurance agent for an explanation of confusing terms and conditions in the policy.
10 Optional Insurance Endorsements You May Wish to Consider
If you own something unusual and valuable, you can bet a basic homeowner’s insurance policy will exclude the item. Here is a list of 10 optional add-ons, called insurance endorsements, many homeowner’s insurance providers offer:
Flood Insurance
Standard home insurance policies exclude flood damage. Depending on where your home is located, you may qualify for flood insurance through the National Flood Insurance Program. Some insurance companies also offer flood insurance. If your home is located in an area prone to flooding, your home loan lender will require flood insurance.
Earthquake Insurance
Earthquake insurance is available through most insurance companies at an additional cost. It is normally issued as an endorsement and attached to your home insurance policy.
Windstorm Endorsement
Most home insurance policies cover damage caused by windstorm and hail. However, in some coastal areas, this coverage is excluded from standard policies. Ask your insurance agent if wind damage is covered by your policy.
Guaranteed Replacement Cost
Guaranteed replacement cost coverage is the most complete coverage for your home. To qualify, you must meet specific underwriting rules and conditions, including increasing the amount of your insurance on a monthly, quarterly or yearly basis to keep up with the inflation rate. Your insurance agent will explain the additional cost and what exclusions and conditions apply. This is sometimes called an "Inflation Guard Endorsement."
Scheduled Personal Property Endorsement
This endorsement is often called a "personal article floater." A personal property endorsement covers possessions such as jewelry, furs, stamps, coins, guns, computers, antiques and other items that may exceed normal limits in your regular home insurance policy. A personal property endorsement itemizes each article, gives a description of the article insured and lists excluded perils.
Increased Limits on Money and Securities
This endorsement increases the coverage on money, bank notes, securities, deeds, and similar financial instruments.
Secondary Residence Premises Endorsement
Homeowners coverage under this endorsement applies to a secondary residence, such as a summer home. Typically, secondary residences are not covered by the home insurance policy on your primary or principal residence.
Watercraft Endorsement
Applies to small sailboats, personal watercraft, and small outboard-motor boats. This endorsement may broaden personal liability and medical payments coverage on these items.
Theft Coverage Protection Endorsement
Theft protection is broadened as a result of this endorsement. This includes theft of contents of your motor vehicle, trailer or watercraft.
Credit Card Forgery and Depositors Forgery Coverage Endorsement
Covers loss, theft, or unauthorized use of credit cards with some exceptions. Also covers the forgery of checks, drafts, promissory notes, and so on with exceptions. May also include identity theft.
Other Coverage & Endorsements
If you own a farm or ranch, you may need a separate policy to cover out-buildings and equipment not found in typical suburban back yards. Talk to your insurance agent if you run a business from your home. Also, the insurance rules for mobile and manufactured homes will be different, and may include requirements for hold-downs. Again, make sure your agent understands all of the facts surrounding your circumstances before you buy any insurance.