Insurance Endorsement – Definition
An Insurance Endorsement is a legally binding document which allows you to make changes to an existing Insurance Policy. An Endorsement allows you to add or exclude insurance coverage or make changes to an Insurance Policy. An Endorsement is issued to correct gaps or mistakes in Insurance Coverage and can be issued for various types of insurances such as Life Insurance, Health Insurance, Liability Insurance, Car Insurance etc.
How an Insurance Endorsement Works?
As mentioned earlier, Insurance Endorsements modify an existing Insurance Policy to add extra coverage or to rectify mistakes in the existing Policy. Depending on the type of Endorsement, an Insurance Company might charge additional premium or in some cases, no Insurance Premium may be charged. Endorsements make changes to an existing Insurance Policy and hence they take precedence over the existing Policy and might even invalidate some of the terms and conditions of the existing Insurance Policy.
An Insurance Endorsement can be issued at the time of Policy issuance, during the term of an existing policy or upon the renewal of the Insurance Policy.
An Insurance Endorsement can be used to do the following:
- Adding Insurance Coverage: Endorsements are most frequently used to enhance insurance coverage which is usually not provided by the existing Insurance Policy.
- Removing Insurance Coverage: Sometimes Endorsements are also issued to remove Insurance Coverage from the existing Policy. This might lead to savings in Insurance Premiums as the Insured removes the non-essential coverage from the Policy.
- Rectifying Errors: Endorsements can be used to correct errors in the Insurance Policy such as an error in the name of Insured or an error in the Risk Location Address for example.
- Adding Insureds to the Policy: Sometimes getting married or having a kid might necessitate passing an Insurance Endorsement to add the Spouse or kid to the existing Health or Life Insurance Policy.
- Naming Additional Insured: An Additional Insured Endorsement is typically used in Liability Insurance. Parties named as Additional Insureds in the Endorsement can also avail coverage under the Policy along with the Insured himself.
How to get an Insurance Endorsement?
There are times when, despite the best efforts there are some errors or coverage gaps in the Insurance Policy. Leaving such gaps or errors in the Policy unaddressed might even lead to rejection of an Insurance Claim. Thus, it is extremely important for the Insured to get such errors in the Insurance Policy rectified with the help of an Endorsement.
The Policyholder must inform the Insurance Company of desired changes to get an Insurance Endorsement. The desired changes may include removing or adding coverage, increasing or lowering limits, or adjusting details. In some cases, the Insurance Companies might ask for Additional Premium for effecting Insurance Endorsements, which the Insured needs to pay.
Once the Insurance Company approves the Endorsement, it becomes legally binding on both, the Insurance Company and the Insured.
In Insurance, Endorsements are a great way to incorporate changes in the Insurance Policy. Whether you want to increase the Sum Insured of the Policy or shift your factory to a new location, all these changes can be incorporated efficiently by means of an Insurance Endorsement. It is essential that the Insured keep records of all endorsements passed in a particular Insurance Policy
Additionally, it is a good practice to review your Insurance Policies thoroughly for any errors or gaps in coverage to ensure that the Policy provides comprehensive coverage as per your needs. It is a good idea to take the assistance of an Insurance Broker who can assist you with your Insurance Policy requirements.
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