Key insurance endorsements to consider during property reviews

Offering to conduct homeowner policy reviews is a great way to demonstrate value, expertise, identify potential coverage gaps and cross sell. As the value of property, goods and services increases, now is the perfect time to reach out and offer your clients a thorough homeowners insurance review. Doing so will allow you to review the existing limits on your clients’ homeowners insurance policies and determine if they are potentially underinsured and at risk for financial loss. It also helps the homeowner be clear on what exactly the policy covers.

Many homeowners believe their current coverage will protect them, but property values and repair costs have risen dramatically in recent years. This means existing policy limits may no longer be adequate. If a major loss occurs and coverage falls short, clients could face tens of thousands of dollars in out-of-pocket expenses. Being underinsured is one of the most significant risks homeowners face, and it often goes unnoticed until it’s too late.

This is a critical opportunity for agents to step in and review policy limits in detail. Explain how coverage works, where gaps exist, and what those gaps could mean financially. Help clients understand the difference between replacement cost and actual cash value, and why sub-limits matter. By clarifying what is covered and what is not, you empower clients to make informed decisions and ensure their protection keeps pace with today’s costs.

During policy reviews, consider also having conversations about two important endorsements that receive little attention but could have a big impact: service line coverage and equipment breakdown insurance.

What is an endorsement in insurance?

Sometimes referred to as a rider or add-on, an insurance endorsement is an amendment to an existing insurance contract that changes the terms of the original policy.¹ Specifically, endorsements add, delete, exclude or change insurance coverage (e.g., increasing coverage limits) without the need for policy renewals or replacements.

Put simply, endorsements are a way to modify an existing policy, often in an effort to address items that were not included in the original contract. Endorsements can often be issued at the time of purchase, some at mid-term, or at renewal, once implemented they take precedent over the original insurance agreement. Because endorsements typically add optional coverage, they can lead to higher insurance premiums.

Service line coverage

Service lines are exterior underground piping and wiring, including permanent connecting valves or attached devices, that provide heat, water, waste disposal, data or power to the residence. Most homeowners do not realize they are financially responsible for the repair and replacement of these lines if they become damaged. Further, most homeowner insurance policies do not cover service line failure, leaving homeowners potentially on the hook for repairs that can easily run thousands of dollars and even make their home temporarily uninhabitable.

Underground lines can fail due to a surprisingly wide range of hidden issues, including rust or corrosion; wear and tear; latent defects; damage from insects, rodents, and other animals; freezing; frost heave; root invasion; artificially generated electrical current; and the weight of vehicles or other equipment.

In many cases, service line repair will entail digging up landscaping, driveways, and sidewalks to access the site of the line break. Sometimes—for example, if the line provides heat during cold weather the home may need to be vacated until repairs are made.

In addition to repairing the line, Nationwide’s service line endorsement coverage includes the costs of repairing or replacing outdoor property such as trees, shrubs, plants, lawns, and sidewalks. If the home must be vacated, it also pays for additional living expenses such as hotels and meals, including loss of rental income and expediting expenses.

Consider the following example. A tree root intrusion cracked a sewer line outside a home, and landscaping was damaged while accessing and repairing the leaking pipe; coverage for the line repair and damaged landscaping was $7,650.

There isn’t much homeowners can do to prevent or even evaluate the aging of underground lines, especially if the system is old and/or vulnerable to tree root intrusion. Service line endorsement coverage can help protect against large, unexpected repair expenses and help make the incident less disruptive to the client’s home life.

Equipment breakdown coverage

Another area of unexpected costs for homeowners is equipment breakdown. This often involves equipment failures of home appliances, furnaces, HVAC systems, or other essential home equipment caused by electrical, mechanical or pressure system breakdowns. Nationwide’s equipment breakdown coverage closes coverage gaps in the standard homeowner property policies. It responds the same way a homeowners policy does and includes electrical, mechanical or pressure equipment that suffers an equipment breakdown. This coverage eases the burden of budgeting for unexpected losses from equipment breakdown (see equipment breakdown playbook).

An example of an equipment breakdown claim might be the following: A power surge from the local utility causes electrical damage to numerous pieces of equipment in the insured’s home. The television, refrigerator, microwave oven, dishwasher, garage door opener and air conditioning system were all damaged. Costs of repairs and replacements were estimated at upwards of $10,000. In this example, Nationwide’s Homeowners’ equipment breakdown coverage would help cover the replacement cost of the fully destroyed equipment.

It should be noted that normal wear and tear is not covered by equipment breakdown coverage.

Additional equipment breakdown coverage endorsements

As the cost of appliances and other essential home items increase, now is an opportune moment to discuss equipment breakdown endorsements with clients. Doing so can have a number of benefits for your agency. Selling equipment breakdown coverage is advantageous for a variety of reasons:

• Inclusion of equipment breakdown coverage has been known to boost retention
• Differentiates your products from the competition
• Serves as a door opener to new business
• The broad coverage is designed to keep up with the pace of change and protect new technologies found in the home
• Demonstrates an additional layer of protection that our policy provides to protect the insureds’ homes.

Changing needs

Consumers value and rely on their independent insurance agent’s expertise. Deepening clients’ understanding on common homeowners’ insurance endorsements takes little time but could pay off in the form of enhancing client retention and increasing client satisfaction.