Extending coverage through "endorsements" or "riders":

"Endorsements" or "Riders" are unusual terms that basically mean that they are amendments to the insurance contract. The typical policy can be viewed as the standard form, but if a builder is worried about certain types of risks that aren't usually covered, then the insurance company will agree to amend or "extend" the policy to include that risk for an additional price. Almost any type of risk imaginable can be handled by way of a rider or an endorsement. Upon payment of the extra insurance premium, the insurance company will agree to "endorse over" the existing terms and provide the builder an "extended policy". For example, if building a high rise building near an airport, a builder might fear the risk of terrorism, which is likely an excluded risk from the insurance policy. In this case, the builder can ask for a quote from the insurance agent to give a "terrorism" rider or endorsement. At the end of the day, the typical insurance policy will contain a handful of riders or endorsements once the negotiations with the insurance agent are over because every project is unique. The riders are generally one page in length and sequentially numbered and attached to the back of the policy. The rider will generally state that despite what the general insurance policy says, that the insurance company agrees to insure against a specific type of risk.

Insurance policies can be complicated and many times the types of coverage sought is dictated by the bank, which wants to make sure its construction loan is secured. Because insurance policies are complicated, in larger projects it is advisable to have a construction attorney review the policy. However, in all cases a good insurance agent and company should be consulted who know the ins and outs of the construction process and the risks that builders face.