What is an 'endorsement' in the context of insurance?

An endorsement in the context of insurance refers to a written amendment that changes or adds coverage to an existing insurance policy. This is significant because endorsements can modify the terms of the policy, such as increasing coverage limits, adding new types of coverage, or excluding certain aspects. By using an endorsement, policyholders can tailor their insurance contracts to better fit their specific needs without having to purchase a new policy.

This flexibility is crucial for individuals and businesses as it allows them to adapt their coverage in response to changes in circumstances or risk exposure, thereby ensuring that their insurance remains relevant and effective. The other options represent different aspects of insurance but do not define what an endorsement is within this context.