What Is an Insurance Endorsement?

How an insurance rider or endorsement works

Understanding what is an insurance endorsement to a policy
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An insurance endorsement is an amendment or addition to an existing insurance contract which changes the terms or scope of the original policy. Endorsements may also be referred to as riders. An insurance endorsement may be used to add, delete, exclude or otherwise alter coverage. An insurance endorsement may be issued mid-term, at the time of purchase, or at renewal. The insurance endorsement is a legally binding amendment to the insurance contract.

What is the purpose of an insurance endorsement?

The purpose of an endorsement is a policy change. Insurance companies create endorsements to offer options to insureds to add coverage or increase coverage limits, but insurers may also issue special endorsements to limit or restrict coverage. Insurance endorsements are used in property and casualty insurance. You may have endorsements issued on home, renters, condo, automobile and watercraft insurance policies, among others. 

How long is an insurance endorsement valid?

An endorsement alters the policy and becomes part of your legal insurance contract. It remains in force until the expiry of the policy and may renew under the same terms and conditions as the rest of your policy. The exception to this is if the endorsement specifies a specific term which the endorsement is valid.

Example of an insurance endorsement with a limited term

An endorsement that reads: "It is understood and agreed that liability will be extended to an additional location at X address from June 1, 2017, to June 30, 2017." contains a specified date range for the endorsement or agreement to the policy amendment. In this example, the endorsement specifies its term, so if the policy expires in December 2017, the endorsement will not necessarily be valid for the full term of the contract but rather respects the specified term.

One kind of endorsement that is commonly used for a limited term may be a vacancy permit or a home under renovation. The policy would not normally cover this kind of risk for the full term, but if you let your insurance company know about the temporary need, they may grant you permission for a limited term by adding an endorsement stating such. They may also choose to limit coverages during the term as well.

Two Kinds of Insurance Endorsements

The insurance endorsement is the new document that you receive after making a policy change

It forms part of your insurance agreement and you should always keep a copy of it with your original policy documents.

Example: Sometimes it may be stated that the endorsement replaces the previous version of your contract, for example in the case where you change address, the previous policy contract with the old address is no longer valid. In a case like that, the endorsement replaces the original contract document.

Example: Julie and Sam get divorced and Sam signs over ownership of the house and car to Julie. Since Julie is now the only registered and legal owner of the property, she may request an endorsement to her home and car insurance policies removing Sam's name. The policy documents she receives with the corrections will be an endorsement. The endorsement will now only show Julie as the named insured. This replaces the previously issued version of the contract and the endorsements will now represent the revised insurance contract agreement. Changing the named insured is a major policy change, the previous policy with Sam's name on it becomes replaced by the new endorsement.

The insurance endorsement may also refer to a clause or rider

When an endorsement adds coverage to your policy, lists additional conditions to the contract, adds coverage such as an insurance rider, or adds restrictions on coverage or limitations following underwriting by the insurance company, then it may be done as an endorsement. The entire policy wording or contract is not affected, only the specified new terms, therefore the endorsement becomes an add-on to the policy and should be kept with the original document.

Example: Elizabeth gets engaged and realizes that her condo policy has a very low jewelry limit, she requests an endorsement adding a scheduled item: her engagement ring. The endorsement will describe the new coverage: scheduled jewelry. This endorsement does not in any way replace the condo policy, it only adds coverage in the form of an endorsement rider. 

Example: Jim needed extra coverage for his home business. He was able to add an insurance endorsement to his current homeowner's insurance policy to cover his business.

In types of endorsement the insurance endorsement changes the terms and conditions of your policy and becomes part of your binding insurance legal contract.

An insurance endorsement is a good way to add extra coverage to your insurance policy or make a change without having to request a whole new policy and may provide other benefits for the policyholder

Insurance endorsements can be used in many ways to enhance an insurance policy and to provide a more complete and individual coverage for policyholders.

Basics of an Insurance Endorsement

An insurance endorsement is a policy change that:

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  1. Adds to the coverage of an insurance policy
  2. Limits or deletes coverage of a policy
  3. Adds or deletes people and locations on an insurance policy
  4. May be added mid-term
  5. Premiums may be adjusted as a result of an insurance endorsement 

Any time your insurance policy changes inform yourself of all the implications

Endorsements used in insurance policies can differ depending on the insurance company and the type of insurance the endorsement is applied to. If you get a document that says it is an endorsement to your policy, make sure and compare it to your original policy declaration page and see what has changed or contact your insurance representative to make sure you understand the consequences of the new document. 

When an insurance endorsement reduces or deletes coverage

If you get an endorsement in the mail, or from your insurance company and do not know what it is about, make sure you call your insurance representative and find out.

Endorsements can also remove or limit coverage. For example, limiting liability to the premises, or excluding water damage to your property, or increasing your deductible. These situations reduce coverage and can also be issued as company mandated endorsements based on underwriting concerns.

Insurance endorsements may provide important advantages or limitations to your policy, make sure to understand what endorsements are available for a policy along with how that endorsement can change your current insurance policy by asking your insurance representative.

Example: Jeff decides to call his insurance representative to find out what kind of endorsements may be available on his car insurance policy. His agent tells him that he does not have rental car reimbursement coverage on his policy, and he can add it as an endorsement or wait until his policy renewed in 8 months. He decides to take the coverage right away as an endorsement. Three months later his car gets damaged in an accident. Because he added the rental car reimbursement coverage mid-term through the endorsement, he got to use a rental car while he waited for his car to be repaired and the insurance company paid everything. If he had not had the endorsement, he would have been stuck without a car for days or would have had to pay out of pocket. He was pretty happy he called to find out about his additional coverage options and added the coverage mid-term through the endorsement.

Related: Best Whole Life Insurance Policies

Article Sources

  1. National Association of Insurance Commissioners. “What Is an Insurance Endorsement or Rider?” Accessed June 2, 2020.

  2. Allstate. “What’s an Insurance Endorsement?” Accessed June 2, 2020.

  3. State Farm. “Personal Property and Casualty Insurance.” Accessed June 2, 2020.

  4. IRMI. “Vacancy Permit Endorsement.” Accessed June 2, 2020.

  5. 21st Century Insurance. “Endorsement Named Driver Exclusion.” Accessed June 2, 2020.

  6. Allstate. “What Is Scheduled Personal Property?” Accessed June 2, 2020.

  7. Allstate. “Does Homeowners Insurance Cover Business Property?” Accessed June 2, 2020.

  8. FindLaw. “Insurance Endorsements.” Accessed June 2, 2020.