Extended Coverage
October 1, 2009
Having coverage means that one is insured against certain risks, as mentioned in the insurance policy. An extended coverage is the coverage provided for risks which are not originally included in the policy. This is required when one feels that certain risks have been left out of the policy, and there are chances of loss from those risks. The term Extended coverage can also be used in context with a warranty. In this, a person can purchase extended coverage which will cover replacement or repairs beyond the warranty period.
Basically the term Extended Coverage is used with reference to matters dealing with Insurance of properties. The insurance policy on properties, has exclusions of certain risks and one has to study the policy and see wether all the risks are covered. Generally, property insurance, will cover risk of loss due to fire and damage caused by lightning. The insurance companies knowing the usual requirements would have an Extended Coverage endorsement, which the customer could take if he wanted additional coverage for risks like riots, commotion caused by strikes, windstorms, explosion, vehicle damage, smoke damage, aircraft damage and so on. This means a person can ask for Extended Coverage to suit his specific needs in a policy.
For example a person might be living in an area which is prone to hurricanes and will see whether hurricane is covered or not. Also he has to take into account related risks like a flash flood and so on which might not come under the coverage of hurricane damage. So he might have to take extended coverage for flash floods as well.
Apart from the number of risks, Extended Coverage can also mean an addition to the amount, covered by the policy. If a person finds that a particular risk has a high chance of occuring, he can take an extended coverage in terms of amount for that particular risk. For example if storms are frequent in a particular area, then a resident can have an Extended Coverage on loss due to storms, and get paid an additional amount, or get a complete repair of the damaged property.
When buying a policy, it is good to study the different coverage options available. This should be compared with your requirements and also gauge the possibilities of other risks which can happen. Once you have gauged all your requirements you can go for an extended coverage in your policy if those items are not covered within the main policy contract. The insurance broker can also advise you about what other people in your area, had coverage for, and which coverages were lacking in their policies.
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