A car insurance endorsement, also known as a rider or a policy endorsement, is a modification or addition to an existing auto insurance policy. It is a way for policyholders to customize their coverage to better suit their specific needs or to add greater protection than what is included in a basic policy.
Endorsements can be added to an insurance policy to provide coverage for specific situations that are not covered by the standard policy. They can expand or enhance coverage in areas such as liability, comprehensive coverage, collision coverage, medical payments, uninsured/underinsured motorist coverage, and other policy components.
Car Insurance Endorsement Quick Facts
- Endorsements are usually added to car insurance for an additional cost
- Endorsements are not available to all drivers (may be based on driving record, claims experience, and other factors)
- Endorsements may be packaged together for a discounted rate
- Endorsements may vary by company, not all providers offer the same coverage
- Endorsements are not mandatory but they are strongly recommended
Some examples of car insurance endorsements include:
- Replacement cost
- Waiver of depreciation
- Family protection
- Loss of use
- Claims forgiveness
- Minor conviction
- Claims advantage
- Hit and run deductible waiver
- Damage to non-owned vehicles
- Emergency Roadside Assistance
What is a Replacement Cost Endorsement?
In the event of a total loss, replacement cost endorsement is determined by the actual cost to make a replacement with the same vehicle, rather than the bill of sale. If the price of the new vehicle increases between you making the purchase and a total loss, you'll be paid out the replacement cost of the new vehicle rather than what you paid.
If you paid $50,000 for an SUV in 2019 and suffered a total loss of that vehicle in 2021, the replacement cost might have increased to $62,000. If you have a replacement cost endorsement, it will replace the vehicle at the $62,000 evaluation.
In the event of a partial loss where repairs are needed, this coverage will pay for original equipment parts, in lieu of less expensive aftermarket parts. Having replacement with OEM parts can be costly solution out of pocket, but many vehicle owners prefer it.
This coverage is usually available for 5 policy terms. Cost varies by company, but is typically calculated by a percentage of the total policy amount. Normally starting at around 10% of the policy amount and climbing year over year as the vehicle depreciates, up to 30% and higher in year 5 of coverage.
What is a Waiver of Depreciation?
This endorsement limits the depreciation of a new vehicle in the event of a total or partial loss. Similar to a replacement cost endorsement, in the event of a total loss, replacement cost will be determined by the price on the bill of sale rather than the market price.
In the previous described situation, the driver’s vehicle had appreciated $12,000 in the time between the purchase and the accident. A replacement cost endorsement would cover the full replacement cost of the vehicle at $62,000. A waiver of depreciation will only cover the bill of sale price of $50,000.
What is a Family Protection Endorsement?
This endorsement protects against uninsured or underinsured motorists in the event of a not-at-fault collision. It does not cover the cost of the vehicle (that would be collision insurance). This coverage is often considered an extension of liability coverage.
If you were in a not-at-fault accident with a driver who does not have insurance, and there has been property damage, bodily injury, or loss of life in your vehicle, this endorsement would cover necessary liability costs. If the uninsured motorists causes $5,000 in property damage and $100,000 in personal injuries, this insurance endorsement would cover $105,000 worth of damages. This is opposed to lengthy legal proceedings and personally suing the person that caused the accident.
If the other driver was underinsured, a family protection endorsement will top up the remaining coverage up to $2 million. If a motorist only has the Alberta minimum $200,000 in liability coverage and causes $1.1 million in damages, your insurance company would top up your claim by $900,000. The cost for this endorsement is typically less than $50 annually.
What is Loss of Use?
If your car is in accident, regardless of fault, this endorsement will cover the cost of a rental car. Provided your vehicle is unusable in the interim or is being written off. Depending on the company, you may be given a lump sum to pay for rental vehicles or a time frame of how long you rent a vehicle for, usually 30-45 days.
What is a Damage to Non-Owned Vehicle Endorsement?
This endorsement extends your car insurance to rental vehicles. Whether you’re renting a vehicle for a vacation, trip, your car is in the shop, or another reason, this endorsement will extend to your vehicle. Note, that this coverage is only applicable to Canada and the United States. Travelling outside of that area will require different coverage. Talk to your broker about your options.
What is Claims Forgiveness?
This endorsement covers a one time at-fault claim on your insurance without increasing your premiums. This protection is an earned perk from insurance companies given to drivers who are 6-8 years accident/claims free. The cost can vary by company, but is usually around $50/year to add to your policy. Your tenure with the same insurance provider can help get a claims forgiveness endorsement added to your policy.
What is a Minor Conviction Endorsement?
This endorsement will not increase your insurance premiums for your first minor pull over ticket. A single pull over ticket can increase your insurance premiums by 10%-25% depending on the company. More information about conviction available here.
What is a Claims Advantage Endorsement?
This endorsement offers financial protection in the event of claim. If you have this endorsement when making a claim, you will not be required to pay your deductible. This endorsement is not available to all policies, and it does not apply to hail damage. The annual cost is usually around $30.
What is a Hit and Run Deductible Waiver?
Similar to a claims advantage endorsement, only this covers the deductible in the event of a hit and run. Hit and run’s fall under collision coverage and normally require the deductible to be paid. This coverage is usually between $5-$15 annually.
What is an Emergency Roadside Assistance Endorsement?
Many drivers in Alberta pay for some sort of emergency roadside assistance package. This added endorsement works similarly to those, if you need roadside assistance, you can use this endorsement on your policy to get help. This applies to the following situations and beyond:
- Locked your keys inside your vehicle
- Ran out of gas
- Flat tire
- Dead battery
- Roadside breakdown
These programs can be accessed through your insurance companies mobile app or service line. The cost is usually less than $50 annually.
Conclusion
Car insurance endorsements are a supplemental coverage designed to provide more well rounded protection. It is important to note that most major insurance companies may have similar endorsements but they will have distinctions between them or different offerings entirely. In order to ensure that you've got the best possible coverage, a broker can help you navigate through the different coverage options and endorsements.
If you're looking for help with your car insurance coverage, talk to a broker like Armour Insurance. We're here to help.
