A “rider” is an alteration of a standard insurance policy — a bit of extra language that’s added into the policy’s contract. The purpose of a rider can be either to add a specific coverage that the standard policy does not include or to eliminate a particular coverage from the policy. A rider, therefore, can let you customize a standard policy to suit your specific needs.
(Note that some insurance companies refer to riders as “endorsements.” For this article, we’ll use just the term “rider.”)
How your insurance policy works
To understand what an insurance rider is, it may help to take a broader look at how an insurance policy works.
At a basic level, an insurance policy is a contract between you and an insurance company. This contract states that you’ll pay an amount of money called a premium. In return, the insurance company will — under specific conditions — provide a monetary payout. These conditions are spelled out in the contract and referred to as “coverages.” For example, your auto insurance policy’s collision coverage will provide a payout if you’re responsible for an accident and damage your vehicle. Your homeowners insurance dwelling coverage will provide a payout if your home is damaged by an event such as a fire.
Standard policy contracts are often based on a template. In other words, the standard auto policy you have is the same as the standard policy every other policyholder insured with your company has. In fact, insurance companies typically use language for their contracts that’s standardized across the industry.
How a rider works with your policy
So, where does a rider fit into all this? A rider is how insurance companies can provide some customization to those standard policies. It's additional contract language that can add coverages that don’t come with the standard policy or alter or remove existing coverages.
Depending on the insurer, you may be able to add a rider when you buy or renew the policy or in the middle of your policy term. Your insurance company or agent may even recommend one or more riders, depending on your situation. It’s important to keep in mind that a rider will cost extra — above the basic premium. So be sure you’re only adding riders that you genuinely need.
With most insurance companies, you can also drop a rider from your policy at any time. Your insurer or agent can explain the rules and the process you need to follow to have this done.
Examples of insurance riders
Riders are available on homeowners (including renters and condo), auto, and life insurance policies. Here are some examples.
- Scheduled personal property coverage - This is for valuables such as jewelry, furs, or antiques, which have only a minimal amount of coverage on a standard policy. With a rider, these items can be insured for their appraised value.
- Water backup coverage - This is for water damage caused by a backed-up drain or sump pump. It pays for cleanup, repairs to your home, and to repair or replace damaged furniture or other possessions. A standard homeowners policy typically does not provide this.
- Business property coverage - This is additional coverage for those who run a home-based business or store business property in their home.
- Earthquake coverage - This is coverage to repair or rebuild your home if it’s damaged in an earthquake. Depending on the insurance company, earthquake coverage may be available as a separate policy.
- New car replacement coverage - If your car is declared a total loss, this coverage will ensure you receive a replacement car of the latest model. This rider is typically only available with insurance policies for newer cars.
- Roadside assistance coverage - This provides coverage for emergency services related to things such as flat tires, dead batteries, or breakdowns.
- Rideshare coverage - If you drive for Uber or a similar service, there may be coverage “gaps” between your personal auto policy and the insurance provided by the service. A rideshare coverage rider fills those gaps, so you’re fully insured.
- Custom equipment coverage - This is for high-value aftermarket paint, electronics, wheels, metalwork, performance equipment, or other vehicle customizations. These are items that may not be covered on a standard car insurance policy.
- Accelerated death benefit - This is a change to how the policy benefits are paid. Suppose you're diagnosed with certain illnesses (defined by your insurance company). In that case, you can tap into your death benefit to pay for medical bills and related expenses.
- Long-term care - This is similar to an accelerated death benefit, except it’s triggered by a chronic illness that takes away your ability to care for yourself. You can draw on your death benefit to help pay for the cost of long-term care, such as a nursing home.
- Waiver of premium - This waives the premium payments if you become disabled (based on the insurance company’s definition) and can no longer make them.
Get help understanding your policy needs
Riders help people customize their insurance coverage to meet specific needs not addressed with a standard policy. Understanding just what you need, however, can often be confusing. Experts recommend consulting with an insurance agent. Agents are licensed by your state and are trained in the insurance products they sell. What's more, they're dedicated to helping people sort through their insurance options to tailor a policy to their needs. Find an independent insurance agent.