Understanding Insurance Endorsements for Cars

An insurance endorsement is any change to an insurance policy that adjusts the policyholder’s coverage. Insurance endorsements can include the following types of changes:

• Additional coverage, like adding coverage that is otherwise excluded from the policy
• Exclusions, such as excluding certain claim types
• Modifications of coverage, like expanding the scope of the existing coverage¹

You can seek endorsements when you purchase your policy, when you’re in the middle of the term, or when you renew your policy. Once the change is made, the endorsement is an official part of your insurance plan and guides your coverage accordingly going forward.

How Long Endorsements Are Valid

Whenever you add endorsements, they’re in effect for the remainder of your policy’s term

• New car replacement: Did you buy a new car? If so, consider adding new-car replacement coverage, which would get you a car of the same or similar make, model, and year if you total the vehicle. Or, it could provide you with a specific dollar amount to replace the car yourself.
• Gap coverage: For loaned or leased vehicles, gap coverage will cover the remaining amount on a loan if you’ve totaled your car. Most lenders and lessors require gap insurance. Imagine you totaled your leased car that’s only worth $15,000, but you still owe $20,000 on it. Gap coverage ensures you’re not left paying that $5,000 difference out of pocket.
• Rental car coverage: Rental car coverage provides you with a rental car if your car is being repaired under a covered claim. It typically comes with daily and total limits, for example, maximum $30 daily reimbursement, for up to 30 days or $900 total.
• Rate lock: Rate lock is a protection that says your rate won’t rise if you meet certain conditions in a given time period, like not causing any car accidents. Erie is a notable insurer that offers rate lock, which applies the same rate as long as you don’t change the policy, change addresses, or add/remove drivers.
• Diminishing deductible: A diminishing deductible means you’ll pay less and less for your deductible each year you go without an accident or claim, depending on the insurance provider. With some companies, the deductible can go all the way down to $0.² Liberty Mutual is an example of an insurer that offers diminishing deductibles.
• Commercial or rideshare insurance: You’ll need separate coverage if you drive for commercial reasons, such as for a rideshare service like Uber or a food delivery service like Grubhub. Regular personal auto insurance policies don’t apply to any commercial driving, so make sure you’re covered properly with this endorsement.

How Endorsements Affect Premiums

The cost of insurance endorsements depends heavily on what type of endorsement you’re adding to your existing insurance policy. For example, adding roadside assistance from Allstate starts at just over $6 a month, while gap insurance similarly costs only a few dollars per month.  An endorsement’s effect on your premium also depends on whether you’re adding coverage, excluding coverage, or modifying coverage. Obviously, adding more coverage will cause premiums to increase and vice versa.

Do Endorsements Have Deductibles?

Typically, the only coverages that require insurance deductibles are collision and comprehensive coverage, which cover your property damages in both collisions and non-collisions.

1. Contact your insurance agent. The easiest way to add an endorsement to your policy is to ask your insurance agent directly. They can discuss your needs and adjust your policy accordingly.
2. Add coverage online. With some auto insurance companies that have robust digital services, you may be able to add endorsements through your online account or maybe even the insurer’s mobile app. It all depends on your provider.

Car insurance isn’t one-size-fits-all. Companies tailor policies to specific needs, whether you just started driving for Lyft as a side hustle, took out a loan for a new car, or added an expensive stereo you’d like to protect. Endorsements allow you to adjust your plan as necessary to ensure you always have the right coverage. Now that you have a grasp on endorsements, learn about another key part of car insurance policies: the policy declarations page.