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Endorsement on an insurance policy


What is an endorsement on an insurance policy? It is an extension, addition, deletion  or expression to the existing subject matter. It is a confirmation of there being a correction/alteration to the present situation, subject matter insured, location etc. An insurance endorsement is an add-on to an existing insurance contract and it  adds to the terms of the original policy for proper clarity in the interpretation of the policy. Endorsements are  legally binding changes to an existing policy.

An endorsement can be issued at the time of purchase, mid-term or at renewal time. Insurance premiums may be affected and adjusted as a result.

An endorsement brings further transparency to the policy coverage by adding or modifying the policy wordings.

Is an  endorsement as valid as a policy?

Yes, an endorsement is an insurance policy  that either changes or adds to the already existing policy for the purpose of more clarity on the subject matter covered either the location ,place or risk type etc.

It must be noted that the endorsement is effective along with the policy document. An endorsement is read in consonance with the policy document  and is not separate from the policy document. An endorsement cannot be read independently of the policy document and in the absence of policy document endorsement holds no value. 


What are the four types of endorsements?

  1. Blank endorsement

  2. Addition endorsement 

  3. Refund endorsement 

  4. Conditional endorsement

Blank endorsement: This is used for change of address location that does not require additional premium. However if the risk undergoes a change due to the location, additional premium is charged.

Addition endorsement: Suppose you own a large independent house and have an area to construct a new garage for your car. The policy does not cover this new construction. So the insurer has to be informed of this new addition and an endorsement is passed by collecting additional premium for covering the new garage in the same premises. An insurance endorsement amends the original policy to include coverage of the garage. However if the garage is built in a basement of the house risk type changes and appropriate premium is charged.

Refund endorsements: These are used in declaration policies to adjust the premium collected as against the exact declaration of stocks as received.

Conditional endorsements: These are issued as a warranty where  endorsement wordings and requirements which are expressly stated in the endorsement must be complied. Non- compliance with the endorsement wordings can prejudice the claim.

What are the benefits of insurance endorsements?

  • Endorsements help get customized coverage for  the  evolving needs of a business. Endorsements enable insurance companies  to carve suitable  coverage to meet individual businesses, specialized requirements and specific risks.

  • Endorsements are more cost-effective as one need not purchase a fresh new policy.

  • Also the procedure of proposal form and other KYC norms need not be required as this is an addition to the original policy.

Planning an Insurance program is an analytical exercise and requires comprehensive assessment of the risks and risk exposure.

We at Zen Insurance assist in customizing the right Insurance cover to suit your needs and budget. Please contact us for assistance.

Disclaimer:

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.

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