Key Takeaways
- Scheduled Personal Property endorsement provides AGREED VALUE coverage for specific items (jewelry, fine art) — eliminates sublimits
- Earthquake endorsement is required for earthquake coverage — typically has a PERCENTAGE deductible (10-20% of Coverage A)
- Water Backup and Sump Overflow endorsement covers sewer/drain backup — excluded under standard policy
- Home Business endorsement extends liability and property coverage for small home-based businesses
- Replacement Cost on Contents endorsement upgrades Coverage C from ACV to replacement cost settlement
Last updated: December 2025
Common Homeowners Endorsements
Endorsements modify the base policy to add, remove, or change coverage. Understanding these endorsements is essential for customizing protection and for the exam.
Scheduled Personal Property Endorsement
For valuable items that exceed sublimits
The Problem
Standard sublimits are inadequate for valuable items:
- Jewelry sublimit: $1,500 for theft
- Fine art: Often no specific coverage
- Collections: Subject to general limits
The Solution
Scheduled Personal Property (SPP) — also called a "floater" or "inland marine" endorsement:
| Feature | Standard Policy | With SPP Endorsement |
|---|---|---|
| Valuation | ACV with sublimits | Agreed Value |
| Coverage type | Named perils | All-risk (open perils) |
| Deductible | Policy deductible | Often zero |
| Items covered | General categories | Specifically listed items |
How It Works
- Item is appraised
- Agreed value established with insurer
- Item "scheduled" (listed) on endorsement
- Separate premium charged
- In case of loss, agreed value paid
Common Scheduled Items
- Jewelry and watches
- Fine art and antiques
- Furs
- Cameras and equipment
- Musical instruments
- Silverware and goldware
- Stamp and coin collections
- Firearms
Earthquake Endorsement
Required for earthquake coverage
Key Features
| Feature | Details |
|---|---|
| Deductible | Percentage (typically 10-20% of Coverage A) |
| Coverage | Adds earthquake as covered peril |
| Applies to | Dwelling, other structures, personal property |
Percentage Deductible Example
- Coverage A: $400,000
- Earthquake deductible: 15%
- Deductible amount: $60,000
- $100,000 earthquake damage: Insurer pays only $40,000
What's Covered
- Earth movement from earthquake
- Volcanic eruption (some policies)
- Landslide caused by earthquake
What's Still Excluded
- Flood from earthquake (tsunami)
- Fire from earthquake (may be covered under standard policy)
Water Backup and Sump Overflow
Covers water damage from drains and sewers
What It Covers
| Source | Covered with Endorsement? |
|---|---|
| Sewer backup | YES |
| Sump pump failure | YES |
| Drain backup | YES |
| Surface water entering home | NO (still flood) |
Common Limits
- $5,000 to $25,000 typical
- Separate from Coverage C limit
- Own deductible may apply
Home Business Endorsements
For home-based businesses
Standard Policy Limitations
| Coverage | Standard Limit |
|---|---|
| Business property on premises | $2,500 |
| Business property away | $500 |
| Business liability | EXCLUDED |
Endorsement Options
| Endorsement | What It Adds |
|---|---|
| Incidental Business | Increased limits, limited liability |
| Home Business | More comprehensive coverage |
| In-Home Business | Full business property and liability |
When Commercial Policy Is Needed
- Employees coming to home
- Customers on premises regularly
- Significant inventory
- Professional liability exposure
Replacement Cost on Contents
Upgrades personal property from ACV to RC
How It Works
| Feature | Standard (ACV) | With RC Endorsement |
|---|---|---|
| Settlement | Replacement - Depreciation | Full replacement cost |
| 10-year-old TV ($800 new) | $400 (50% deprec.) | $800 |
| Condition | Immediate payment | Must actually replace |
Process
- Insurer pays ACV immediately
- Insured replaces item
- Insurer pays difference (depreciation holdback)
Identity Theft Endorsement
Protection against identity fraud
Coverages
| Coverage | Details |
|---|---|
| Expense reimbursement | Costs to restore identity |
| Lost wages | Time off work to resolve |
| Legal fees | Defending wrongful claims |
| Case management | Professional assistance |
Typical Limits
- $15,000 to $25,000 expense coverage
- Deductible: Usually $0-$250
Inflation Guard Endorsement
Automatically increases coverage
How It Works
- Coverage A increases automatically each quarter
- Percentage increase (typically 4-8% annually)
- Helps maintain adequate coverage as costs rise
Example
- Year 1 Coverage A: $300,000
- Annual increase: 6%
- Year 2 Coverage A: $318,000
Other Common Endorsements
| Endorsement | Purpose |
|---|---|
| Personal Property Replacement Cost | RC on contents |
| Increased Dwelling Limits | Above standard maximums |
| Ordinance or Law | Building code upgrades |
| Personal Injury | Libel, slander coverage |
| Watercraft | Larger boats |
| Additional Insured | Add others to policy |
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Test Your Knowledge
A homeowner has a $30,000 diamond ring. To fully insure it, they should:
A
B
C
D
Test Your Knowledge
An earthquake endorsement typically has what type of deductible?
A
B
C
D
Test Your Knowledge
Water backing up through a sewer into the basement is:
A
B
C
D
Up Next
5.1 Personal Auto Policy Overview
Chapter 5: Personal Auto Policy
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