Illinois Property Insurance Basic Principles Practice Test

What is an endorsement in a property insurance policy?

A written amendment attached to policy that changes, adds, or removes coverage or terms. A separate policy. An endorsement is not allowed in property policies. A premium discount only.

Correct Answer:

A separate policy.

Explanation:

In property insurance, an endorsement is a written amendment attached to the policy that changes, adds, or removes coverage or terms. It lets the policy be customized after it’s issued without issuing a new contract, such as adding coverage for a valuable item, removing coverage for a specific peril, or adjusting limits or deductibles for certain parts of the policy. A separate policy is a different contract altogether, not an endorsement, and endorsements are common rather than prohibited. A premium discount only affects price, not the actual SAMPLEcoverage terms.

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