Washington State Insurance Practice Exam

How is the term "endorsement" best defined in insurance terms?

1. A complete new insurance policy

2. A cancellation of an existing policy

3. A change made to an existing policy

4. A claim made by the insured

The correct answer is: A change made to an existing policy

In insurance, the term "endorsement" refers to a change made to an existing policy. Endorsements are used to modify the terms of an insurance contract, which can include adding or removing coverage, altering coverage limits, updating the list of insured properties, or making other adjustments to the policy details. This process enables policyholders to customize their insurance coverage according to their specific needs without having to issue an entirely new policy. Endorsements are important because they allow flexibility within an insurance agreement and can address changes in circumstances or requirements. For instance, if a homeowner acquires a new significant asset, such as a valuable piece of jewelry, an endorsement can be added to extend personal property coverage to include this item. The other options do not accurately describe what an endorsement is. A complete new insurance policy would not be termed an endorsement; rather, it is an entirely separate contract. Cancellation of an existing policy signifies a termination of coverage, while a claim made by the insured refers to the formal request for payment or benefits under an insurance policy, which is also unrelated to the definition of an endorsement.