Texas All Lines Adjuster Practice Test

Which provision allows policyholders to change coverage in an insurance policy?

1. Liability

2. Endorsement

3. Exclusion

4. Estoppel

The correct answer is: Endorsement

The provision that allows policyholders to change coverage in an insurance policy is an endorsement. An endorsement is a document that modifies the terms of an insurance policy. It can be used to add, delete, or alter coverage or coverage limits as agreed upon by both the insurer and the policyholder. Endorsements are crucial because they provide flexibility to customize a standard insurance policy to better fit the needs of the policyholder. For example, if a homeowner wanted to add coverage for a home office or to increase the limit on valuable possessions, an endorsement would be the means to facilitate those changes within the existing policy framework. In contrast, liability refers to the legal responsibility or obligation covered by the insurance policy, exclusion indicates specific conditions or circumstances that are not covered by the policy, and estoppel is a legal principle that prevents a party from arguing something contrary to a previously established fact or position. These other terms do not pertain to modifying policy coverage.