Endorsement
A document signed by the parties that changes an insurance contract in force, an extension, a restriction, a change in sum insured or insured, and prevails over earlier terms for what it changes.
An endorsement is the instrument by which the insurer and the policyholder change an insurance contract during its term. It can extend cover, by adding a site, a vehicle or a risk; restrict it, through a new exclusion or a higher deductible; change sums insured, premium, insured or beneficiary; or record an increase in risk declared by the insured. The French Insurance Code requires any addition or change to the contract to be recorded in an endorsement signed by the parties, which distinguishes a contractual change from mere information. The endorsement prevails over earlier terms on the points it changes, and it must be drafted as precisely as the original contract, or it creates ambiguity about the scope of cover. In subscription markets, endorsements follow market rules that allocate the power to accept them between the leader and the followers. For the underwriter, the endorsement is often where extensions slip in during the year, under commercial pressure, without being priced or weighed against accumulation: a portfolio deteriorates as much through its endorsements as through its new business.
Textbook case: during the year, an insured opens a new 15 million euro warehouse. An endorsement adds it to the property policy for an additional premium calculated pro rata for the remaining period; without the endorsement, the warehouse would have been covered only within any automatic acquisition clause, often capped at a few million.
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