Insurance endorsements

An insurance endorsement (or rider) modifies a small business insurance policy to either add, delete, or exclude certain types of coverage. It allows you to customize your policy to better fit your needs or budget without having to shop for – and buy – a new policy.

Insurance endorsements allow you to buy insurance that better fits your needs. For example, if a policy you’re considering doesn’t protect a key risk, person, or entity, you can ask your agent to add an endorsement that adds the missing protection.

Conversely, if a policy includes coverage you don’t need, you can request an endorsement to remove it, which could save you money.

Think of endorsements as one of the basic building blocks of insurance. Insurance policies typically have the following components:

• An insuring agreement, which lists the named perils or risks the policy protects you from
• Exclusions, which lists losses or events the policy doesn’t cover
• Conditions, which define the policy terms you must meet to be protected

How do endorsements fit within this framework? They can either modify the insuring agreement, removing coverage you don’t need, or negate one or more exclusions, adding coverage back into the policy. 

The result is a policy that more closely corresponds to your business’s risk exposures and insurance budget.

One of the most common ways small business owners use endorsements is to add additional insurance protection to a policy. This might be because the policy specifically excludes it or because it simply doesn’t mention the risk at all. 

You might wish to consider adding an endorsement because you want your policy to:

• Protect an additional person or entity (additional insureds, mortgage holders, loss payees)
• Include different coverage terms (waiver of subrogation)
• Extend coverage in certain ways (example: extended reporting period in claims-made professional liability policies)

Here are four common insurance endorsements that small business owners use to customize their policies:

Additional insured endorsement adds someone other than you to your insurance policy – most often general liability insurance. It extends your insurance to a third party, such as a subcontractor doing work for you. This would protect that entity against third-party lawsuits or commercial property damage.

Extended reporting period endorsement modifies a claims-made professional liability (errors and omissions insurance) policy so you can report claims even after the expiration date of your insurance policy.

Prior acts coverage endorsement modifies a claims-made liability policy to protect you against losses that occurred before you bought your current policy.

Equipment breakdown endorsement modifies your commercial property insurance policy so that it can generate funds to repair or replace machinery or equipment that has suffered a sudden and accidental malfunction, such as a short circuit, loss of air pressure, or power surges.

Accounts receivable endorsement can be added to your commercial property coverage to protect your small business from financial losses when you can’t collect money from clients or customers, or when your accounts receivable records have been damaged or destroyed in a covered loss.

Electronic data processing (EDP) endorsement is normally added to a business owner's policy (BOP) and helps cover your electronic data processing equipment, such as computers and backup systems, against data loss during a power surge, fire, natural disaster, or similar incident.

Electronic data liability endorsement expands your property damage liability coverage to include a loss of data caused by accidental damage to a customer’s computer, hard drive, or other data storage equipment.

While cyber liability insurance usually covers data lost from a targeted software attack, electronic data liability insures a data loss when there’s accidental physical damage to a network or storage device.

You can request an insurance endorsement when you are shopping for a new policy or at any point in your existing coverage’s policy period. Or you can request one when your policy comes up for renewal. Just ask your Insureon agent for assistance.

Insureon helps small business owners compare business insurance quotes with one easy online application. Start an application today to select the right policy limits for your risk exposures.