What is a Car Insurance Endorsement?
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A car insurance endorsement can change your coverage significantly.
An insurance endorsement, also called a rider, is a change to your insurance policy that impacts your coverage. You might add an endorsement to your auto insurance policy to cover an aftermarket part, for example. Or, you might add an endorsement to your home insurance policy for a high-value item – like a $10,000 engagement ring.
Endorsements are more common with homeowners or renters insurance, although you can also add endorsements to your car insurance policy.
How Do Car Insurance Endorsements Work?
A car insurance endorsement is anything you add to your car insurance policy that adjusts your coverage.
If you have aftermarket parts on your vehicle, for example, then you might add an endorsement to ensure your policy covers those parts.
Someone with a disability might have a $5,000 wheelchair lift on their vehicle, for example. Ordinary car insurance will not cover this lift, but you can add an endorsement that would extend coverage.
Once you add an endorsement to your insurance policy, that endorsement should remain active as long as your policy as active. The endorsement is part of your policy from that point forward.
A car insurance endorsement typically expands your coverage. It raises the value covered by your policy. For that reason, you generally pay extra to add an endorsement to your policy. A standard endorsement, however, should not cost you more than a few extra dollars per month.
Common Car Insurance Endorsements
Many people add roadside assistance to their auto insurance policy as an endorsement. Others add car rental coverage, classic car insurance, or pet insurance.
Common car insurance endorsements include:
Modified Vehicle Coverage: If you have installed aftermarket parts, custom equipment, and other things onto your vehicle that are not standard, then you might buy modified vehicle coverage as an endorsement. Your $2,000 aftermarket stereo system, for example, will not be covered by a standard car insurance policy, although you might add an endorsement to ensure it’s covered.
Classic Car Insurance: Classic car insurance is different from ordinary car insurance coverage. Typically, a 40-year-old car isn’t valuable – unless it’s a classic car. A classic car endorsement lets you cover a classic car at its stated value, which is typically higher than its actual cash value.
Roadside Assistance: All insurers let you add roadside assistance to your coverage for a few dollars per month. Roadside assistance covers dead battery jumpstarts, flat tire changes, fuel deliveries, and more. If you already have AAA or another third party roadside assistance plan, then you don’t need to add a roadside assistance endorsement.
Pet Insurance: Some car insurance policies cover pets automatically, although others do not. If you’re concerned about your pet, then consider adding a pet insurance endorsement to your policy, which could cover veterinarian bills and other expenses after an accident.
Car Rental Coverage: Some policies cover car rentals automatically whenever your ordinary vehicle is in the shop for repairs. Other policies do not cover car rentals, but let you add an endorsement for rental car coverage.
Coverage for Other Vehicles: If you have ATVs, snowmobiles, golf carts, scooters, motorcycles, and other vehicles, then you might add an endorsement to your policy for these vehicles. Ordinary car insurance might provide basic liability coverage for these vehicles, but you may need to add an endorsement for collision or comprehensive coverage.
Other Endorsements: You can add an endorsement to your car insurance policy for many different things. If you have a unique vehicle or unique circumstances, then contact your insurance agent to ask about an endorsement.
Endorsements for Business or Rideshare
If you drive your car for business purposes, then ordinary car insurance will not cover you. You may need to add a business-related endorsement to your policy.
Similarly, anyone who drives for Uber, Lyft, or another rideshare service will not be covered by ordinary car insurance. You may need to purchase a special rideshare insurance endorsement.
Business Insurance: If you drive your car for business, then your personal auto insurance policy may not protect you. You may need to buy a special business insurance endorsement. Sometimes, your employer’s insurance automatically extends to you. In other cases, however, you need your own insurance endorsement – say, if you’re running your own business.
Rideshare Insurance: Your insurance does not cover you when driving for Uber, Lyft, or other rideshare services. Uber and Lyft extend car insurance when you’re driving to someone’s pickup or drop-off point, but they don’t cover anything else. All major insurers now offer rideshare coverage to ensure you stay fully protected while driving for Uber or Lyft.
Endorsements for New Vehicles
If you own a new vehicle, then you might add endorsements to your policy specific to that new vehicle. Common endorsements for new vehicles include:
New Car Replacement Insurance: New car replacement insurance is a popular endorsement for those who own a new vehicle (bought within the last two years). If your new vehicle is declared a total loss after an accident, then you might not receive adequate compensation to buy a new vehicle. New vehicles depreciate sharply in value. Consider adding a new car replacement endorsement to maximize coverage.
Gap Insurance: Gap insurance covers the ‘gap’ between your vehicle’s value and the amount you owe. If you are leasing or financing a vehicle, then you are required to have gap insurance (it’s built into your payments).
Other endorsements you can add to your insurance policy include:
Waiver of Depreciation: The waiver of depreciation endorsement is similar to new car replacement insurance. With a waiver of depreciation endorsement, you will receive the full value of your vehicle after a total loss. Typically, your insurer compensates you for the value of your vehicle minus depreciation.
Stated or Agreed Value Insurance: You might own a $500,000 vehicle, but you only want to pay for $50,000 of coverage for that vehicle. Or, you might own a classic car with a unique valuation. In this case, an agreed value or stated value endorsement could give you the exact coverage you need.
Non-Owned Vehicle Endorsement: Non-owned vehicle coverage gives you added coverage if you damage someone else’s vehicle while driving – like a friend’s vehicle or a rental car.
How to Add an Endorsement
Contact your insurer or insurance agent to add an endorsement to your policy.
In most cases, you can add an endorsement to your policy instantly, and your endorsement takes effect immediately.
Most endorsements cost a few extra dollars per month. A higher-value endorsement, however, might significantly increase the cost of your policy.
Note: Insurers use different names for different endorsements. Some insurers call it a ‘legal liability for damage to non-owned vehicle’ endorsement, for example, while others call it a ‘rented vehicle coverage’ endorsement. Some insurers call it a ‘waiver of depreciation’ endorsement, while others call it a ‘new car replacement’ endorsement.
Car insurance endorsements extend the coverage of your policy. You might use an endorsement to add coverage for a unique vehicle like an ATV, for example. Or, you could use an endorsement for classic car coverage, rideshare insurance, and other unique circumstances.
Talk to your insurance agent to add an endorsement to your auto insurance policy.