Any business owner knows how important it is to protect your business from everyday risks.
So it’s no surprise that often a good amount of research goes into finding the right insurance to meet your business needs. But what happens if your business circumstances change after you’ve signed on the (virtual) dotted line for insurance coverage?
A common misconception is that once executed, insurance contracts become set in stone. The reality is that insurance policies can change at any time to accommodate new conditions and requirements. Those changes are made through amendment documents added to the policy, known as endorsements.
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What are endorsements in insurance?
The most straightforward way to explain insurance endorsements is that they make legally binding changes to an existing policy. Endorsement allows you to add and exclude coverage, make corrections, or implement other modifications to the initial policy.
For example, let’s say you own a restaurant and install a new patio to expand your outdoor seating area. However, after you’ve completed the job, you discover that your commercial property insurance policy doesn’t cover your new patio. An insurance endorsement can amend the original policy to include coverage of the courthouse.
You may also have heard of the term “insurance rider”. This is another term used for endorsement – think of a “rider” in the context of an endorsement that overrides the initial policy.
How do insurance endorsements work?
As mentioned, insurance endorsements replace the original insurance policy. Approvals take precedence over the initial policy and invalidate any out-of-date information. Here’s a look at some of the common ways that some businesses use endorsements:
- Adding Coverage: Business owners can purchase an insurance endorsement to obtain additional protection that is not included in their initial insurance policy.
- Dropping Coverage: Endorsements can also be used to drop coverage from your policy that you don’t need, saving you money.
- Naming an Additional Insured: An Additional Insured will provide coverage for those named in the endorsement endorsement and for the Primary Insured. For example, endorsements for an additional insured may be useful for general contracting companies that employ subcontractors to complete work on the company’s behalf.
- Extended Reporting Period: Also known as “tail coverage,” an extended reporting period endorsement allows you to file a claim after your policy has expired or been canceled. Business owners can add this type of endorsement to claims-made policies to expand coverage for events that occurred while their policy was active but were not reported until after coverage had lapsed.
- Approval of accounts receivable: With the endorsement of accounts receivable, you can protect your business from financial hardship for the time you are unable to collect money from customers or clients or if a covered risk has affected your accounting records. has been destroyed.
Regardless of the reason for the endorsement, you can add them to your policy at any time – when purchasing coverage, during your policy term, or at renewal. Also, once applied for, endorsements are valid for the duration of your policy unless otherwise specified.
type of approval
While there are different ways to use an endorsement to modify insurance coverage, there are also different types of endorsements. There are four types of advertising insurance:
Standard supports are the most common type. These endorsements have been prepared by insurance advisory organizations, including American Association of Insurance Services (AAIS)) And this Insurance Services Office (ISO), for the use of insurance providers. Because insurance advisory organizations template them, standard endorsements are not only easy to apply to a policy, but they are also safe and secure.
Templated endorsements are convenient, but they don’t meet the needs of every business. That’s where non-standard supports come in. An insurance company drafts this type of endorsement, which may involve making changes to standard templates or drafting new documents.
There are occasions when endorsement is required by law, although such instances are quite rare. For example, let’s say your business is in a high-risk flood zone, and your mortgage is with a government-backed lender. in that case, you are Must have flood insurance, There are also some advertisements mandated by ISO regulations. Your insurance agent or broker can advise you on any mandatory endorsements for your business.
As the name suggests, voluntary support is just that – voluntary. Unlike mandatory endorsements, these are optional endorsements that a policyholder or insurer adds. The vast majority of support would fall into this category.
What are the benefits of an insurance endorsement?
Even the most comprehensive insurance policy can have gaps in coverage that can put a business at risk. Insurance endorsement is another way to help you obtain coverage that is customized to meet the evolving needs of your business. The endorsement enables insurance providers to tailor coverage to meet the specific needs and specific risks of individual businesses.
Not to mention that depending on the backing done, it can also save you money on your insurance premiums. Plus, endorsements are more convenient and often more cost-effective than buying a whole new insurance policy.
How to get insurance approval
Thinking an endorsement might be useful to address changes in your business or bridge gaps in coverage? The good news is that getting an insurance endorsement is easy. All it takes is contacting your insurance provider to let them know what changes you need. They will also be able to advise you about how an endorsement will affect the cost of your coverage.
And since your business will inevitably go through changes along the way, it’s a good idea to review your policies annually to make sure they continue to meet the needs of your business. Keep in mind that you can add an insurance endorsement whenever you need to – whether at the inception of a new policy, mid-term, or during renewal.
Want to learn more about adding an endorsement to your insurance policy? Contact one of our specialist brokers at any time to learn about your coverage options.