Which of the following is true about insurance endorsements?

Insurance endorsements are attachments or amendments made to an insurance policy that modify its terms, coverage, or limits. The statement that endorsements can increase coverage limits is accurate, as they are often used to provide additional coverage for specific situations that may not be included in the standard policy. For instance, an endorsement could add coverage for valuable personal property or increase liability limits for certain activities.

Endorsements can be added for various reasons, including adapting the insurance policy to fit the insured’s specific needs or circumstances. This flexibility is a key characteristic of endorsements, making them a valuable tool for policyholders seeking to enhance their insurance protection.

In contrast, endorsements are not always optional, as some policies may include mandatory endorsements to comply with regulatory requirements or to protect against particular risks. Not all endorsements reduce coverage; many serve to enhance or clarify existing protections. Additionally, endorsements can often affect premium costs, either increasing them when additional coverage is added or potentially maintaining them if they offer clarifications without increasing risk.