An endorsement (also called a rider, especially in life and health insurance) is a written attachment that changes the terms of an insurance policy. It can add coverage, remove coverage, increase or decrease limits, or correct information. Because the endorsement becomes part of the policy, it lets a standard, mass-produced contract be tailored to one customer's needs without rewriting the whole thing.

Why it matters

No off-the-shelf policy fits everyone perfectly. Endorsements are how insurers customize coverage—adding protection for a valuable engagement ring, scheduling business equipment, or excluding a specific risk. They're also how a policy gets updated mid-term when a client's situation changes.

Endorsement vs. rider

The two words mean essentially the same thing—a modification attached to the policy. By convention, endorsement is used in property and casualty insurance, while rider is used in life and health insurance. Don't let the different labels confuse you on the exam; functionally, they both amend the contract.

A simple example

A homeowner buys an expensive piece of jewelry that exceeds the policy's normal limit for valuables. To fully protect it, the agent adds a scheduled personal property endorsement listing the item and its value. Now that ring is specifically covered, beyond what the base policy would have paid.

Don't confuse it with…

• An endorsement modifies an existing policy; it is not a brand-new standalone policy.
• An exclusion removes coverage, but exclusions can be part of the base form or added by endorsement—an endorsement can either add or take away.
• A binder provides temporary coverage before a policy issues; an endorsement changes a policy that already exists.

On the exam

Remember: endorsement (P&C) = rider (life/health), both amend the policy. When an endorsement and the base policy conflict, the endorsement generally controls because it's the more specific, later agreement.