What is endorsement in insurance?

At times, we might have to make changes to our existing insurance policies. For instance, you might want to add your newly bought expensive piece of jewelry to your existing house insurance policy. This addition and any other changes like this can be made with the help of an endorsement without having to issue a new policy. Interesting isn’t it?

So let us dive deeper and know what endorsement in Insurance is in a little detail and know its benefits.

What is endorsement in insurance?

Endorsements, also known as riders are used to make changes or alterations to an existing insurance policy. They can be used to add, remove and replace coverage mentioned in a policy. They are legally binding amendments to an insurance contract that can be issued during the tenure of a policy. Endorsements can be made in a policy at the time of purchasing it or at renewal.

When an endorsement is made in a policy, adjustments might also be made in the premium of the policy. Endorsements are used to make changes in insurance policy providing coverage to property, casualty insurance, and also insurance policies related to health and life.

An endorsement remains in force as long as the original policy does not expire or mature. The terms and conditions of renewal of the endorsements are usually the same as that of the original policy. There might be exceptions in case the endorsements are valid only for a specific time period, as mentioned in the policy.

Types of insurance endorsements

Insurance endorsements can be of two types:

1. Replacement of your previous policy document

In this category, the insurer sends or gives you a whole new contract with the upgrades or endorsements made in the original policy. The previous policy papers become invalid and are of no further use.

For example, in case you change your details like your address, phone number, or anything mentioned in your original contract. The insurer will send you new papers with changes made making the old papers invalid.

2. Additional documents added to your policy

When the endorsements add coverage, lists additional conditions, adds more limitations or restrictions, etc., it is done by adding more papers to your existing insurance policy. This is because there are no changes but just additions made to the wordings of the original policy. The endorsements papers are add-ons to the policy and must be preserved along with the original papers.

What do endorsements cover?

Endorsements cover a wide range of situations. They can cover situations like the removal of a person from a policy to the addition of an individual into the contract. It can also be used to include items to your policy, for example, you can add objects of art or pieces of jewelry to your home insurance plans. However, this will lead to an increase in the value of the premium as per the value of the additional objects.

Endorsements can also be used to limit coverage. This may involve a scenario where you might want to exclude water damage from your house insurance, the changes can be made in your contract with the help of endorsements.

You must always compare your endorsement contract to your original policy declaration paper, to have proper knowledge of the changes made in the contract. Being well versed with endorsements also helps you to understand the new document’s consequences in a better way.