Rhode Island Insurance Adjuster Exam

What is the purpose of an endorsement in an insurance policy?

1. To provide additional coverage

2. To alter the policy

3. To cancel a policy

4. To increase the premium

The correct answer is: To alter the policy

The purpose of an endorsement in an insurance policy is primarily to alter the policy. Endorsements are amendments or additions made to a standard insurance policy that change its terms, coverage, or exclusions. This may include adding new coverage options, changing an insured item's value, or modifying existing terms to better fit the policyholder's needs. While endorsements can indeed provide additional coverage or affect the premium, their fundamental role is to modify the original contract. For example, if a homeowner wants to add coverage for a newly purchased piece of jewelry, an endorsement would specify the new terms applicable to that item, effectively altering the insurance policy itself. Thus, understanding endorsements as tools for alteration provides clarity on how they function within the broader insurance framework.