What is an insurance endorsement or rider?

By: Aya Alhakim on January 16, 2025

Insurance policies are meant to provide a safety net for various aspects of our lives, but sometimes the basic coverage just doesn't cut it. That's when insurance endorsements, or riders, come in handy.

An insurance endorsement, also known as a rider, is a tool that allows you to tailor your policy to fit your unique needs without having to start from scratch.

Here’s what you need to know about how they work, what the different types of endorsements are, and why they can be beneficial.

Jump straight to:

How do insurance endorsements work?
What are the different types of insurance endorsements?
How to find the right rider for your policy

How do insurance endorsements work?

While standard home and auto insurance policies typically cover common scenarios like house fires or car theft, they might not cover more specific needs, such as flood damage in a flood-prone area.

This is where riders come in—think of them as modifications or add-ons to your existing policy, designed to adjust or expand the coverage provided.

The cost of adding a rider can vary significantly based on the type of coverage and the insurer. Generally, these costs are lower than purchasing a separate policy, making them a more cost-effective option.

What are the different types of insurance endorsements?

Each type of insurance—home, auto, or business—offers different riders designed to address specific gaps or risks. Understanding the variety of options available can help you make informed decisions and customize your coverage effectively. Here are some of the most common types:

Homeowners insurance riders

Homeowners insurance riders provide extra protection for your property and belongings beyond what a standard policy covers. Here’s a few examples:

Flood protection: Many standard homeowners' policies in Canada don't cover flood damage. To secure your home and belongings in such scenarios, you may need to purchase a separate overland flooding or sewer backup endorsement (provided that your home is not located on a flood plain). It's important to check with your insurance provider to understand your coverage options.
Home business coverage: Designed for individuals who run a business out of their home. Standard homeowners’ insurance may not extend to your business-related property or liability, so this rider helps bridge the gap. It typically covers business equipment, such as computers, printers, or inventory, and includes liability protection if a client or delivery person gets injured on your property. It may cover lost income if your business is interrupted by a covered peril, allowing for greater financial stability during an unexpected setback.
Scheduled personal property: This type of rider allows you to insure high-value items individually beyond the typical limits of a homeowners’ insurance policy. This rider is usually used for items like jewelry, artwork, musical instruments, antiques, , or collectibles that need specific coverage. It covers a wider range of risks, including accidental loss or damage, which your regular policy may not include (for example, losing an engagement ring).

Other endorsements include identity theft protection or equipment breakdown coverage, which protects essential home systems like heating, cooling, or major appliances if they fail due to mechanical or electrical issues. All of these are relatively low-cost ways of delivering coverage that fits your specific needs.

For example, identity theft protection can cost as little as $15 to $30 per year. The price depends on the specific coverage and the insurance company, so it's important to talk to your insurance agent to find the best option for you.

Auto insurance endorsements

Auto insurance endorsements are another common way to enhance your policy. These add-ons adjust coverage based on your driving habits or unforeseen incidents. Here are just a few examples of the many endorsements available:

Roadside assistance: Helps you deal with the unexpected challenges that can occur when your car breaks down. The coverage typically includes services such as towing, flat tire changes, battery jump-starts, fuel delivery when you run out of gas, and even lockout services if you’re accidentally locked out of your vehicle.
Rental reimbursement: Provides compensation for a rental car while your vehicle is being repaired after an accident. It saves you money as daily rental fees can add up quickly without this coverage. Keep in mind however that this endorsement applies only if the repair stems from a covered claim, like an accident. Non-covered repairs, such as routine maintenance, won’t qualify.
Uninsured/underinsured motorist protection: Covers medical expenses, lost wages, and other damages if you’re hit by a driver who doesn’t have enough insurance—or any insurance at all. Some policies may even include coverage for property damage to your vehicle. This endorsement usually kicks in only after the at-fault driver’s insurance (if any) is fully exhausted.

In Ontario, most endorsements are known as Ontario Policy Change Forms (OPCFs). For example, the OPCF 27 endorsement provides coverage for legal liability related to non-owned automobiles. It typically costs between $15 and $50 for an average coverage limit of $50,000. The cost goes up if you want more coverage, but it's still cheaper than getting a new policy or paying out of pocket.

Business insurance riders

Business insurance riders allow owners to tailor their policies to address specific risks their operations may face. Common options include:

Business interruption coverage: Covers loss of income if your business operations are disrupted due to a covered event, such as a fire or natural disaster. This makes sure you can manage ongoing expenses like payroll or rent during downtime.
Equipment breakdown coverage: Protects against the costs of repairing or replacing essential machinery or equipment that breaks down unexpectedly. This is especially valuable for businesses reliant on specialized tools or systems. Keep in mind that some policies may exclude older or outdated equipment, and any compliance upgrades required for replacements may need additional coverage.
Cyber liability coverage: Offers protection against losses resulting from data breaches or cyberattacks, including costs related to customer notifications, legal fees, and recovery of compromised systems. To qualify for coverage, policies often require businesses to implement basic cybersecurity measures, such as firewalls and encryption.

Always consult with your insurance provider to fully understand what each rider includes, its limitations, and how it integrates with your existing policy. This makes sure that your business remains well-protected against potential challenges.

How to find the right rider for your policy

There are many different endorsements to choose from. Here’s a guide on how to select the best one, which aligns with your unique needs and circumstances:

1. Assess your coverage needs

Begin by identifying gaps in your current insurance policy and considering areas where you might need extra protection. Here’s how to approach it:

Review your policy: Look at what your existing policy covers and note any exclusions. For example, does your homeowners insurance cover natural disasters like floods or earthquakes?
Evaluate your belongings: Make a list of high-value or sentimental items like jewelry, antiques, or musical instruments. For instance, if your engagement ring exceeds your policy’s limits for jewelry coverage, you may need a scheduled personal property rider.
Account for lifestyle changes: Life events often bring new insurance needs. Examples include adding a rider for a newly renovated kitchen, coverage for a home-based business you recently started, or heightened life insurance riders after the birth of a child.

2. Research available riders

Different insurers offer different riders, so it’s essential to compare your options.

Check with your insurer: Start by asking your current insurance provider about what riders they offer. Common examples include equipment breakdown, identity theft protection, rental reimbursement, and uninsured motorist protection.
Compare providers: If your current insurer doesn’t offer the rider you need, explore other companies. For example, you might find better flood coverage from a specialist insurer.
Use online resources: Many insurers have downloadable guides or FAQs on their websites explaining their rider options. You can also search for rider reviews to hear from other customers about their experiences.

3. Read the fine print

Understanding the terms and conditions of a rider is crucial to avoid surprises. Here is what you need to pay attention to:

Coverage limits: Check if the value of what you want to insure exceeds the rider’s limit. For example, if your artwork is valued at $50,000, but the rider only goes up to $25,000, you’ll need additional coverage.
Exclusions: Make sure you know what’s not covered. A flood rider might exclude coverage for specific types of water damage, like leaks caused by a lack of maintenance.
Premium costs: Confirm the cost of adding the rider and consider how it fits into your budget. Some riders, like identity theft protection, may only add $15–$30 annually, while others may be significantly more depending on the type of coverage.

4. Regularly review and update your policy

Your insurance needs will change as your circumstances evolve. Make it a habit to review your policy and riders at least once a year or after a significant life event. Here are examples of situations that might require adjustments:

Home improvements: If you install a new bathroom or upgrade your kitchen, you may need extra coverage for the increased property value.
Business growth: If you’ve recently taken your side hustle full-time, you may need improved home business coverage to protect new equipment or inventory.
Relocation: Moving to a different area with different risks (like wildfire zones or floodplains) can change your coverage needs.

By following these steps, you can choose the right riders to customize your insurance policy and get the best protection for your needs.

From protecting valuable items to making sure you're covered for life's unexpected turns, these add-ons let you adjust your policy as your needs change. They can fill gaps in your current coverage without the cost or hassle of getting a new policy.