What is the purpose of an endorsement in insurance?

An endorsement in insurance serves as a modification or supplementation to the original insurance policy, which can clarify, amend, or add specific provisions. When a policyholder requires changes or seeks clarification on certain aspects of their coverage, an endorsement becomes necessary. This can include clarifying terms, coverage limits, or conditions that were not adequately outlined in the original contract.

While some endorsements might expand coverage (which could relate to option B, adding new types of coverage), their primary function often encompasses making revisions or clarifications as needed. This distinct aspect is crucial since endorsements ensure that both the insurer and the insured have a mutual understanding of the terms of the policy, including any adjustments or clarifications that might arise during the policy's life.

Moreover, options regarding canceling a policy or increasing premiums aren't relevant to the core purpose of an endorsement. Those processes are part of broader policy management rather than specific modifications made within the document itself. Therefore, the emphasis on clarifying or revising policy provisions clearly defines the role of an endorsement in the insurance landscape.