Although the process of buying, maintaining, and filing claims for insurance coverage can sometimes be stressful, owning insurance can provide significant peace of mind. After you’ve decided what type of insurance to buy, you’ll probably have a lot of decisions to make regarding the specific terms of your policy. And in addition to the standard provisions of your insurance contract, there may be changes or addendums added on, known as insurance riders. The following article describes insurance riders and how they might affect the coverage of your insurance policy.
Insurance Rider Defined
An insurance rider is a supplementary part of your insurance that adds benefits to the original, standard policy. As the policyholder, you pay for these additional benefits in order to obtain a policy that’s more tailored to your specific needs or the fact that your circumstances may change over time. An insurance rider is a legally binding part of the insurance contract, just like the other parts of your insurance policy, and can help you avoid the added expense and hassle of purchasing a whole separate policy for those same benefits.
Examples of Insurance Riders
There are many types of insurance riders, since there are many types of insurance needs. Some of the more common insurance riders include the following:
- Long-term Care Rider: Especially for people over 60, long-term care insurance can be a smart purchase since it helps cover the costs of daily services such as bathing and dressing for someone who is elderly or has a long-term illness. This type of care is not usually covered by health and disability insurance, but it is offered as a stand-alone policy or as a rider to other policies, such as life insurance.
- Inflation Rider: When you buy something like title insurance, your coverage may be tied to the value of your home when you purchased it. An inflation rider, whether attached to title insurance or some other insurance (such as long-term care insurance), adjusts the amount of coverage to reflect the increase in value (or costs) caused by inflation.
- Life Insurance Term Conversion Rider: This type of rider allows you to convert a term life insurance policy into permanent life insurance without having to go through another medical exam.
- Property Insurance Rider: Your insurer may also offer insurance riders to your basic property insurance policy for things that aren’t typically covered, such as flooding and earthquakes.
Should I Buy an Insurance Rider?
Insurance companies may offer any number of insurance riders to your standard policy, but whether or not you should buy the rider is a separate concern. A few considerations to keep in mind include the following:
- Is it worth the cost?: Some riders may sound like a good idea, but are actually a bad investment because the likelihood of needing the type of coverage offered is so slight. For example, you most likely don’t need an earthquake insurance rider on your homeowners policy if you live in Delaware or Wisconsin. You’re probably better off investing that money and using it if you need to down the road.
- Duplicative coverage: Before purchasing an insurance rider, you should examine your other insurance policies to see if you’re already covered for the benefits a rider would provide.
- Limiting clauses: Just like it’s important to read your insurance policy thoroughly to understand what’s truly covered, you should also carefully examine the terms of any proposed insurance rider. Sometimes there are limiting clauses contained in the rider which curtail your coverage.
Although insurance companies are obligated to act in good faith, they are also in the business of maximizing their profits. So, while some insurance riders may make sense for your situation, others do more for the insured’s own profit margin than they do for your financial future.
Protect Your Insurance Rights
Buying and maintaining insurance is a chore all on its own. Most of us can’t be expected to understand all of the intricate terms and implications of an insurance contract, much less the numerous state and federal insurance laws that might apply. However, this can leave you at a disadvantage if your insurance company denies your legitimate claim or otherwise acts in bad faith. Get help understanding and defending your insurance rights by contacting an experience, local insurance attorney today.