By Richard A. McGrath, CIC, LIA
Imagine having auto insurance coverage where your premiums don’t increase when you have an accident; having veterinary bills paid for if your pet is injured during an auto accident, or having coverage to pay for a new cellphone or laptop computer if they are damaged in an accident.
Increasingly, consumers can use specialized endorsements on their auto insurance to purchase not only the coverage they need, but the coverage they want. Endorsements vary from one carrier to another, but a typical endorsement will add only about $25 to $50 each year to your premiums.
In the insurance industry, an endorsement is a clause written into an insurance policy detailing an exemption from or change in coverage. Examples of some of the endorsements available include:
Accident forgiveness. Even the safest drivers occasionally have accidents. When you cause an accident, your auto insurance premiums typically will increase significantly. If you have an accident forgiveness endorsement, your points will not be surcharged to your auto policy.
Usually an accident forgiveness endorsement covers only one at-fault accident per policy, but a single endorsement will cover accidents by other drivers on your policy. If your driving record is good enough, you may qualify for a combination of accident forgiveness and minor violation forgiveness in a single endorsement.
Like an accident forgiveness endorsement, a minor violation forgiveness endorsement enables the insured to have a single traffic violation, such as running a stop sign or red light, without surcharge points being added onto the policy over a specified period (e.g., 36 months).
An accident forgiveness endorsement can help control premium costs, as the price can more than offset the rate increase that would kick in after an accident or traffic violation.
Pet lovers. This endorsement typically pays up to $500 in veterinarian bills to cover injuries to a dog or cat that is injured in a covered loss resulting from an accident in your vehicle. Coverage is limited to one incident and one pet during the term of the policy.
Auto loan/lease gap. In a total loss, this coverage pays the difference between the cash value of an auto and the balance still owed on a qualifying loan or lease.
Personal property. Damage to personal property, including laptop computers, cell phones and other electronic devices, can also be covered with an endorsement. The amount of coverage may vary, based on the item, but it typically includes anything that you might have in your vehicle, ranging from child car seats to clothing.
Rental. This endorsement covers the insured for expenses to rent a substitute vehicle while the insured’s vehicle is being repaired due to a covered loss.
Towing. In addition to covering the cost of towing, this endorsement may include features such as coverage for jump-starts, flat tire changes, roadside fuel delivery, or accidentally locking keys in a vehicle.
Snowplows. This endorsement provides coverage for a loss or damage caused to a snowplow installed in or upon an insured vehicle. Various coverage options and limits are available.
Original equipment manufacturer (OEM) parts. Not all vehicles qualify, but for those that do, the owner can ensure that damaged parts will be replaced only by original parts from the manufacturer when original parts are available.
Disappearing deductibles. Drivers can lower their deductibles for each year they have no accidents for which they are at fault.
Trip interruption. If your vehicle is damaged while you are more than 100 miles away from home and it cannot be driven safely, you will be covered for expenses such as food and lodging or transportation to return home.
Know What’s Covered
Some endorsements have deductibles, others do not. Some package a variety of features into a single endorsement. For example, accident forgiveness and minor violation forgiveness may be packaged with a decreasing deductible feature and a waiver of the deductible when there is a total loss in an accident. The disappearing deductible feature may also be packaged with coverage for accidental airbag discharge and loss of income resulting from an accident in a rental vehicle.
Before considering endorsements, it’s important to know what is covered by your insurance policy and what is not covered. Endorsements can then be used to fill any gaps in coverage.
Because endorsements vary significantly from one insurance carrier to another, be sure to discuss your options with your independent agent to ensure that you are receiving the coverage you want at the best possible price.
Richard A. McGrath, CIC, LIA is President and CEO of McGrath Insurance Group, Inc. of Sturbridge, Mass. He can be reached at firstname.lastname@example.org.
This article is written for informational purposes only and should not be construed as providing legal advice.