Texas Adjuster Practice Test

What is an endorsement in an insurance policy?

1. A provision that indicates what is denied coverage

2. An addition that alters the coverage and price of the policy

3. A clause that extends the expiration date of the policy

4. A type of claim made by policyholders

The correct answer is: An addition that alters the coverage and price of the policy

An endorsement in an insurance policy is an addition that alters the coverage and price of the policy. Endorsements can be used to modify existing coverage, add new types of coverage, or exclude certain risks from a policy. By incorporating an endorsement, insured individuals can ensure that their policy meets specific needs or circumstances that are not covered in the standard terms. This flexibility allows for customization of the insurance policy, thus potentially affecting the premium rates charged as well. This function of endorsements is vital for policyholders who may face unique risks that require tailored solutions, making it a crucial aspect of managing insurance coverage effectively. Understanding endorsements is essential for adjusters, as they play a direct role in claims processing and determining whether particular risks are covered under a given policy.