What does the term “endorsement” refer to in insurance?

The term "endorsement" in insurance refers to an amendment or addition to an insurance policy that alters its coverage. This can include changes that either expand or restrict the terms of the original policy, such as adding new coverage for specific items or removing existing coverage for certain risks. Endorsements are essential tools that allow policyholders to customize their insurance policies to better meet their individual needs.

For instance, a property owner may want to add coverage for a newly acquired asset or to adjust the limits of their liability coverage. In this context, an endorsement acts as a formal adjustment to the policy, providing both the insurer and the insured with clarity on the terms of coverage. This flexibility is crucial in the evolving landscape of risk management, enabling insured parties to adapt their coverage as circumstances change.

The other options do not accurately capture the essence of what an endorsement is within the realm of insurance. An official document from the insurer might refer to a policy declaration, while a type of insurance with a lower premium does not specifically relate to endorsements. Similarly, a report filed after a loss pertains to claims processing rather than policy adjustments, which is the primary focus of a policy endorsement.