What is the purpose of an endorsement in an insurance contract?

An endorsement in an insurance contract serves the specific purpose of modifying the terms or coverages of the basic policy. It acts as an addition or change to the original agreement and can clarify, expand, or restrict coverage based on the needs of the policyholder or the insurer. For example, if a homeowner wants to include additional coverage for valuable personal belongings or wants to change the coverage limit, an endorsement would be used to adjust the policy accordingly.

In contrast, increasing premium rates is typically a separate decision made by the insurer based on various factors, not directly tied to an endorsement. Establishing new insurance agreements suggests forming an entirely new contract rather than simply modifying an existing one, which is not the function of an endorsement. Providing legal advice is outside the realm of what endorsements are designed to do; endorsements are purely contractual amendments rather than legal guidance.