What does a policy endorsement typically do?

A policy endorsement is an official document attached to an insurance policy that alters the terms of the original contract. This can involve adding new coverage, modifying existing coverage, or occasionally excluding certain risks. When an endorsement is issued, it typically serves to clarify, expand, or fine-tune the coverage the insured has, making it a crucial tool in tailoring insurance policies to meet specific needs.

In this context, choosing the option that states it adds or modifies coverage for the insured aligns perfectly with the primary purpose of endorsements. For instance, if a homeowner wanted to include coverage for a newly acquired valuable item, an endorsement would be used to modify the policy accordingly.

Understanding this function helps in realizing how flexible insurance policies can be through these endorsements, addressing personal or business needs as they evolve over time.