As a small business owner, purchasing liability insurance coverage is one of the many important ways that your business mitigates future risk. But it’s not simply some static preventative measure that you set and forget; rather, it’s tailored and continuously updated to best serve your needs.
Over time, your business may grow. Your risk profile could increase or decrease. You may wish to add more or less coverage. You might have specific needs that may not be covered by the original policy. Whatever the case, if you wish to amend, or add something to your policy, you’ll need an insurance rider.
Have you thought about making a change to your general liability insurance? Read on to discover everything you need to know about insurance rider provisions.
What is a rider in insurance?
A rider, also sometimes referred to as an insurance endorsement, is a type of provision to a basic insurance policy wherein the policyholder either amends the terms or tacks on additional benefits or more specific coverage. You can customize your plan according to your current risks and liabilities, taking actions such as requesting further coverage or limiting coverage. It can be added to liability policies such as:
- General liability
- Professional liability
- Rental Units
A rider can be purchased for a nominal fee. And since the process requires little underwriting, the price remains pretty low. This lets you adjust your policy without purchasing a completely new or additional one. Additional benefits of a rider include:
- Cost savings – It’s much cheaper to spend on changes to the existing policy than paying for two separate policies. And, as you adjust the policy over your lifetime to match your risk and needs, you’ll be paying exactly what you need to in order to guarantee your business is protected from liability.
- Flexibility – A rider to an insurance policy lets your plan evolve with you. Your coverage can shrink or expand with your needs and current situation.
Your life—and by extension, your business—changes constantly. Your risks and policy needs in your 20s will be wildly different than those of your 50s—the same is true for your business. The risk and liability concerns for a small business are vastly different than that of a company with hundreds of employees. A rider lets your liability policy change with you and your business.
Do you need a rider?
Ultimately the decision process comes down to a matter of weighing your various risks, costs, and needs. In addition to the underwriting fee, an increase in coverage would mean higher insurance premiums. For instance, if you live in California you may want to add a rider accounting for earthquakes to your commercial property policy. But, if you lived in Florida—the state with the least earthquakes—that provision wouldn’t be worth as much.
Types of insurance riders
Aside from the general riders that would change the limits and coverage of your general liability and professional liability insurance policies, there are several specific types of rider provisions, including:
- Term conversion
- Long-term care
- Life insurance policy
- Commercial property
- Workers’ comp
- Specific types of commercial property
- Extending claim period
Term conversion rider
Term life insurance policies will provide coverage for a specific and limited time window, typically ranging from 10 to 30 years. Upon its expiration, there’s no guarantee that the policyholder will receive a new permanent policy on the same terms, especially since they may be in poorer health. A term conversion rider would let the policyholder convert the term life insurance into a permanent life insurance policy without any need for a medical exam.
Long-term care rider
You can add a rider provision to your life insurance coverage policy that allows the policyholder to convert a portion of the policy into long-term care coverage funds such as in the case of a chronic illness. Naturally, if the cash value is used, it detracts from the death benefit. So, the beneficiaries of your life insurance policy would receive a smaller payout.
There are several instances where your financial needs could feasibly surpass the value of the permanent life insurance policy. In such cases, it would be a smarter move to simply purchase a separate long-term care insurance policy.
Life insurance policy rider
Similarly, you can take out an accelerated death benefit rider if your death is imminent due to advanced disease. This money can then be used to pay for your long-term care expenses or treatment. And, as you’d expect, the portion that gets used would no longer be paid out to the beneficiaries of the life insurance policy.
Commercial property rider
If your commercial property policy for your business only covers equipment and inventory up to a certain amount, you can add on higher coverage with a commercial property rider, or you cover equipment that isn’t kept in one central location with a commercial property floater rider.
If you want to extend the benefits of your workers’ comp policy to other employees or contractors, particularly if you work with Texas employees, you can add a rider which includes them going forward.
Riders for specific types of commercial property
There are certain types of property that a standard commercial property insurance policy won’t include, such as:
- Underground pipes
Extending claim filing period
If you have a professional liability insurance policy, you can file a rider that extends the time period in which a business is able to file a claim.
Thimble: Coverage for you
Traditionally, riders are an important way that a business could change or improve its coverage to suit its current needs. But today, when it comes to general liability insurance and professional liability insurance policies, there’s an alternative to purchasing a permanent policy.
Meet Thimble. It’s on-demand, small business liability insurance coverage that you can purchase when you need it, for how long you need it. Get the benefit of coverage without having to pay high insurance premiums.
Were you called in for a last-minute gig? You can snag a policy that lasts three hours. When you’re done working, you’re done paying. Thimble lets you select a policy by the hour, day, or month. It’s fast, simple, and affordable liability insurance with coverage limits of $1 million or $2 million.
Do you need to protect your small business? You can go from signing up on the Thimble app to having a Certificate of Insurance in under a minute. Don’t wait for disaster to strike. Get covered with Thimble.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.