5 Must-Have Homeowners Insurance Endorsements You Might Be Missing

Home insurance isn’t one-size-fits-all. With the right homeowners insurance endorsements, you can customize your policy to better protect your home and avoid costly coverage gaps. Adding endorsements to your policy can help beef it up and prevent you from painful coverage gaps. Let’s explore a few key endorsements many homeowners may find helpful.

What is an Endorsement? 

An endorsement is an “add-on” to your insurance policy. It changes what a standard policy offers. Endorsements can increase your coverages or even decrease your coverage in exchange for a lower premium. Endorsements help tailor your policy to your budget, property, and lifestyle by adjusting or adding specific protections.

Not everyone will need the same endorsements. Your priorities, home, and risks help determine what makes sense for you. Let’s take a closer look at some common endorsements so you can make informed choices.

1. Extended Replacement Cost

Think of the extended replacement cost (ERC) endorsement like a safety net under a tightrope. You hope you never need it—but you’ll be glad it’s there if you do.

Extended replacement cost is sometimes also called increased replacement cost or extended dwelling coverage. This endorsement increases the amount your insurance company will pay to rebuild your home after a covered total loss. You can usually choose to increase your coverage by 25%, 50%, 75%, or even 100% of your dwelling coverage (also known as Coverage A). 

How Extended Replacement Cost Works

Extended replacement cost will only kick in if needed. For example, if a home has a dwelling coverage limit of $400,000 and the policyholder chooses a 50% extended replacement cost, the policy would provide a maximum of $600,000 to rebuild the home. 

Let’s say that the actual cost to rebuild ends up being $550,000. Extended replacement cost will support in this case. On the other hand, if the actual cost to rebuild is $400,000, your base dwelling coverage is enough and extended replacement cost will not apply. Simply put, you will not profit from having this endorsement.

Why Extended Replacement Cost is Important

1. Inflation and other factors increase building costs. If the cost to replace your home has increased since your policy started, extended replacement cost can grant you additional coverage so that you aren’t stuck fronting the bill.

2. The market value of your home (the amount you purchased it for) is higher than it would cost to rebuild your home, so your mortgagee is requiring more coverage. They will often accept extended replacement cost endorsement instead of increasing the base coverage. This is helpful because you won’t be overinsuring your home which typically will cost significantly more than just adding this endorsement.

   
   

2. Water Backup Coverage

Water Backup coverage helps with water damage caused by clogged drains, sewer backups, or sump pump failures. This can include costs to replace ruined belongings, fix damaged flooring, and clean up mold after the mess. This does not cover the broken appliance itself. For example, if your sump pump fails, your insurance would help pay for the water damage—but not for a new sump pump.

Who Needs Water Backup Coverage 

You may consider adding the water backup coverage endorsement if

• You have a sump pump, especially in a finished basement or basement with storing belongings

• You store belongings in the basement

• Your home has older plumbing

• Your city has an older or overloaded sewer system

3. Personal Property Replacement Cost Coverage

Most standard homeowners policies cover your belongings at actual cash value, the cost to replace them minus depreciation.

With the personal property replacement cost endorsement, your policy pays for the cost of brand-new replacements, not the depreciated value.

For example, if you buy a new laptop for $2,000 and it depreciates by 20% per year (the standard depreciation for a laptop), it will be worth $1,600 one year later and only $1,280 just two years later.

ACV would only give you $1,280 whereas replacement cost would help you buy a comparable laptop at the present price.

This is a great endorsement if you own a lot of personal items, or more expensive ones like furniture, electronics or appliances. Some special items, like jewelry, fine art, and firearms, may need separate coverage or a rider, even with this endorsement. Learn more about sublimits on your insurance policy

4. Matching Roofing and Siding

If you care about how your home looks, this one’s for you!

Without this endorsement, your insurer may approve repairs using the closest available match—even if it doesn't perfectly match the rest of your home.

An Example of Matching Roofing and Siding Coverage at Play

Here’s a fictional example to help explain how this endorsement works.

Maria’s home was damaged in a windstorm. Only part of her tan siding was ruined. Maria gets two quotes from a licensed contractor. To her surprise, the color of the siding impacts the price. The tan siding that would match her house is $10,000 more expensive than the blue siding. Luckily, Maria has the matching siding and roofing endorsement for $10,000 so her insurance will pay for the tan siding.

Maria’s neighbor, John also had similar damages. Unfortunately, John did not have this endorsement and must now choose whether he wants to pay the additional $10,000 out of pocket or have mismatched siding.

5. Other Structures Increased Limits

If you have a detached garage, barn, or free-standing solar panels, the standard limit may not be enough to cover a major loss..

Standard policies include 10% of your home’s coverage amount for other structures. Let’s say your home is insured for $300,000. On a standard policy, you would only have $30,000 for any detached structures.

Other structures are defined as any structure on your property that is NOT attached to your house. For example, a detached garage, gazebo, warehouse, and barn could all be considered other structures. However, some structures used for business or farming purposes could need separate policies as they may not be covered under your standard homeowners policy which is not designed to handle losses arising from business or farm activities.

Who Needs to Increase Other Structures Limits

If you own multiple other structures or any high value structures like free-standing solar panels on your property, it’s worth considering increasing your other structures coverage.

Some may not find it necessary to replace all of their structures. If this is the case, you may opt for a lower other structures coverage, but keep in mind that you may fall short of your true replacement cost needs.

Insurance Tailored for Your Needs

These five endorsements are just a few of the options available. Adding the right endorsements can make all the difference when the unexpected happens.

Your home is unique—your insurance should be too. Talk to your local agent to explore the options that fit your life.