Which of the following statements about riders is true?

Riders are additions or endorsements to an insurance policy that provide benefits or coverage that extend beyond the standard terms of the policy. This means they can customize the insurance coverage to better meet the specific needs of the policyholder. For instance, in a builder’s insurance context, a rider might add coverage for special equipment or additional liability associated with certain projects. This additional coverage is above and beyond what is offered in the base policy, effectively enhancing the level of protection provided.

Understanding the nature of riders helps clarify why the other statements are not true. Riders do not inherently reduce coverage (as stated in the first choice); instead, they enhance it. They are not limited to commercial policies but can also apply to personal insurance policies, contradicting the second statement. Additionally, riders are not mandatory for all policies; they are optional, allowing policyholders to choose whether to add them based on their individual needs. Thus, the correct assertion about riders is that they provide additional coverage beyond the standard policy limits, which is what makes them valuable in tailoring insurance coverage to specific risks.