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When talking about endorsements and insurance, we’re not talking about a celebrity being paid to endorse a certain insurance company!
An endorsement in insurance language is a change made to a policy, either by the insurance company or by you as the policy holder.
Endorsement – made by the insurer
The first type of endorsement is one that is made by an insurance company or underwriter.
Generally this will happen at the time the policy is taken out, however there may be circumstances where an insurer makes an endorsement at a later date.
The endorsement is a written addition that is attached to your original insurance contract or policy document.
The endorsement effectively changes the cover provided, either by adding coverage for something that is not covered by the standard wording, or taking something away.
An example of this type of endorsement could be for a boilermaker.
The standard business insurance wording may make no reference to welding or ‘hot works’, however when the boilermaker occupation is selected, an endorsement relating to hot works is automatically added to the policy.
Another common endorsement when it comes to public liability insurance is the one for Queensland electricians.
Because Qld electricians require a special additional to their public liability policies in order to get their contractor’s licence, a special endorsement must be triggered.
This additional wording would be meaningless for any other business type, which is why it is added as an endorsement rather than being a part of the standard insurance wording.
These endorsements allow insurance contracts and wordings to be far easier to read and understand, as each one does not contain hundreds of pages of information not relevant to your particular business type.
Endorsement – changes that you make
The second type of endorsement relates to changes that you make to an existing business insurance policy.
For example if you need to increase your level of cover due to purchasing some additional equipment, your broker will ‘endorse’ your policy to make the change.
Even if the change results in no change to the cost of your insurance, such as a change of address, it will still be regarded as an endorsement.
It is absolutely vital that you read and understand any endorsements which have been placed on your business insurance policy.
As they have the ability to affect the cover detailed in the standard policy wording (Product Disclosure Statement) they can also have a massive impact in the event of a claim.
If you are unsure about an endorsement to your policy it is important to speak with your insurance broker immediately rather than waiting until it’s too late.
If your policy features an endorsement which you are unhappy about, it is worth asking your broker to try a few other insurance providers, and any decent broker should be doing this anyway.
Just because one insurer places a certain endorsement on your policy does not mean that every other insurer or underwriter will do the same.
For more information please speak with your broker or insurance adviser.