What do Endorsements in insurance do?

Endorsements in insurance serve to modify or alter the original terms of an insurance policy. They are used to add, remove, or change specific coverages and conditions, allowing the policyholder to tailor the insurance contract to better suit their needs. For example, an endorsement might add coverage for a specific event, such as including jewelry protection in a homeowner's policy or adjusting coverage limits.

The nature of endorsements is that they become part of the original policy, creating a way for insurers and policyholders to adapt to changing circumstances or requirements without the need to completely rewrite the policy. This flexibility makes endorsements a crucial tool for both insurers and insureds, facilitating a dynamic approach to managing risks and ensuring adequate coverage.

The other options do not accurately represent the purpose of endorsements. While an endorsement might indirectly lead to a change in premiums depending on the modifications made, its primary function is to change the coverage terms of a policy rather than to increase costs directly. Endorsements do not cancel existing policies; they simply modify them. Lastly, while endorsements do provide some form of documentation regarding changes, their main purpose is not to serve as a legal document but to amend the terms of an insurance policy.