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Any business owner knows how important it is to protect your business from day-to-day risks.
Therefore, it is not surprising that a lot of research is often focused on finding the right insurance to meet the needs of your business. But what happens if circumstances in your business change after you sign up for a (virtual) dotted line for insurance coverage?
A common misconception is that insurance contracts are fixed after they are sold. The reality is that insurance policies can change at any time to accommodate new situations and requirements. These changes are made through amendment documents added to the policy, known as endorsements.
Wondering what endorsements are and what they can offer for your growing business? We have you covered.
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What is an endorsement in insurance?
The simplest way to explain an insurance claim is that it makes legally binding changes to an existing policy. Confirmations allow you to add or remove coverage, make corrections, or make other changes to the original policy.
For example, let’s say you own a restaurant and are installing a new patio to expand your outdoor seating area. However, upon completion of the work, you understand that your commercial property insurance policy does not cover your new patio. Evidence of insurance can change the original policy to include patio coverage.
You may also have heard of the term “insurance rider”. This is another term used for approval – just think of “rider” as an approval that takes precedence over the original policy.
How do insurance confirmations work?
As already mentioned, insurance confirmations change the original insurance policy. Assertions take precedence over the original policy and invalidate any obsolete information. Here are some of the common ways some companies use approval:
- Adding Coverage: Business owners can purchase an insurance certificate to get additional protection not covered by their original insurance policy.
- Withdrawal of insurance coverage. Confirmations can also be used to remove coverage from a policy that you don’t need, saving you money.
- Appointment of an additional insured person: The additional insured endorsement covers the persons specified in the endorsement and the main insured persons. For example, confirmation of an additional insured may be useful for general contractors who hire subcontractors to perform work on behalf of the company.
- Extended Coverage: Also known as “Last Coverage”, Extended Coverage Evidence allows you to file a claim against your policy after it expires or is cancelled. Business owners can add this type of claim to their claims policies to expand coverage for incidents that occurred while their policy was still active but were not reported until coverage ended.
- Accounts Receivable Check: With an accounts receivable check, you can protect your business from financial hardship in cases where you are unable to receive money from clients or clients, or if a covered hazard has destroyed your accounting records.
Regardless of the reason for approval, you can add them to your policy at any time – when you buy coverage, during the term of the policy, or when you renew. In addition, confirmations are valid for the duration of your policy, unless otherwise noted.
Permission types
While there are different ways to use approval to change coverage, there are also different types of approvals. Four types of endorsement insurance:
Standard Confirmations
Standard endorsements are the most common type. These approvals are issued by insurance advisory organizations, including the American Association of Insurance Services (AAIS) and the Insurance Services Administration (ISO), for use by insurance companies. Because insurance advisory organizations template them, standard approvals are not only easy to apply to a policy, but they are also safe and reliable.
Non-standard tolerances
Template matching is convenient, but not suitable for every business. This is where non-standard endorsements come to the rescue. The insurance company develops drafts of such confirmations, which may include changes to standard templates or the creation of new documents.
Mandatory Confirmations
There are cases when confirmation is required by law, although such cases are quite rare. For example, let’s say your business is in a high flood risk area and your mortgage is with a government-backed lender. In this case, you need to insure against flooding. There are also some approvals that are mandatory according to ISO rules. Your insurance agent or broker can advise you on any required certifications for your business.
Voluntary approval
As the name suggests, voluntary approval is simply voluntary. Unlike mandatory confirmations, these are optional confirmations that are added by the policyholder or insurer. The vast majority of endorsements fall into this category.
What are the benefits of insurance confirmations?
Even the most comprehensive insurance policy can have gaps in coverage that can put a business at risk. An insurance review is another way to help you get personalized insurance coverage to meet the changing needs of your business. Claims allow insurance companies to tailor coverage to meet the unique requirements of individual businesses and specific risks.
Not to mention, depending on the approval established, it may even save you money on insurance premiums. In addition, approval is more convenient and often more cost-effective than buying a new insurance policy.
How to get an insurance certificate
Do you think approval can be useful for correcting changes in your business or closing gaps in insurance coverage? The good news is that getting insurance approved is easy. All you need to do is contact your insurance company to let them know what changes you need. They will also be able to advise you on how the approval will affect the cost of your coverage.
And because your business is bound to change, it’s a good idea to review your policies annually to make sure they continue to meet the needs of your business. Keep in mind that you can add proof of insurance when you need it – whether it’s at the start of a new policy, mid-term, or at the time of renewal.
Want to learn more about adding an endorsement to your insurance policy? Contact one of our experienced brokers at any time to learn about insurance coverage options.
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