How Do ‘Riders’ Affect a Policy?

First of all, what is a ‘rider’. It’s a change to the policy, usually an addition of some type of coverage. For instance, the one most people who live on the West Coast are interested in is an earthquake rider. If you want earthquake coverage, you need to check with your agent to see if your company will even sell you an earthquake rider. Earthquakes are not covered in any standard policy and earthquake insurance rates are quite high—but then, so is the risk of earthquakes along the coasts of California, Oregon, Washington, and Alaska, not to mention Hawaii.

After the massive earthquake in San Francisco just over a hundred years ago, most of the property damage was caused by the firestorms that broke out, not the earthquake itself. The property damage was so massive that some insurance companies broke over it, most paid only partially and only a handful honored their policies in full. We live in a post-Katrina world, but like other catastrophes, this one too will subside in our collective consciousness and we will once again lull ourselves with whatever mantra that makes us feel it’s okay to neglect our coverage for now. We postpone it. Then we forget it. Then there is a smallish earthquake and we think about it again for a couple of days. Los Angeles, San Francisco, and Seattle are all overdue for massive quakes. Anybody who’s ever ridden out a minor one may have some grasp of what that might mean. And still we postpone it.

We really do need to remember Katrina. We really do need to realize that if we wait for and expect ‘the authorities’ to do the jobs we pay them for, we could wait for a long time—perhaps for all eternity. There were many, many of those authorities, often at the most local levels, who went well beyond their responsibilities, even after having lost everything themselves. But we all know who are meant. We all remember the bickering and finger-pointing and the disconnect. We all remember the camera crews that went where…others didn’t go. The principal lessons to take from that whole event are these: We need to plan for our selves, our loved ones, our communities, our property as if we alone were responsible for our recovery. Good insurance coverage ought to be part of that plan.

Plan for the likelihood of an event. If you live in tornado country, you need a ‘storm cellar’. You also need to check your policy and see if tornados are covered—otherwise, you add a rider if you decide you want/need/can afford one. If you live in a floodplain, you need an inflatable boat and some rope in the attic. You also need to check your coverage. Flowing water and standing water are two different insurance issues. If you live in blizzard territory you need to store enough heating fuel and living supplies to last at least a week (a good idea anywhere). And check your coverage for ice and snow damage. And if you live on the East or Gulf Coasts, you need to look into storm insurance. But you already know that.

Remember, the home insurance coverage required by most mortgage lenders is to protect their investment. If you want coverage that protects your investment more fully, you may need to add some riders to your policy.

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