What is a policy endorsement?

When taking out an insurance policy, you may have come across the term policy endorsement but what exactly does this mean?

A policy endorsement (sometimes referred to as a ‘clause’) is used to modify an insurance policies terms and conditions to suit the individual risk presented, without the need to completely re-write the policy wording. Each insurance product has its own policy wording, these are generic documents and form the contract detailing what the standard policy includes and excludes.

Your policy schedule will normally state which endorsements apply to your policy and the endorsements are labelled with a number or a name for clearer identification. You will find the full text of the endorsement at the end of the policy schedule or in a separate document.

An example of a endorsement found on a Tradesman Policy can be seen below;

Height Limit

Applicable to the Public and Products Liability Section, and the Employers Liability Section (when Insured under this policy)

We will not provide cover in respect of work undertaken at height where the drop exceeds 10 metres

As you can see, for this particular customer, the insurer has chosen to exclude any cover under this section relating to any work that carried out at a height of over 10 metres.

A further example of an endorsement, again under a Tradesman Policy is;

Excess - Heat Use

Applicable to the Public and Products Liability Section

In respect of Damage to Property arising out of any

1. electric, oxy-acetylene, or similar welding or cutting equipment
2. cutting and grinding equipment using abrasive disks or wheels
3. blow lamp, blow torch, hot air gun or hot air stripper
4. asphalt, bitumen, tar or pitch heater

used away from premises which You own, hire or rent, an Excess of £500 in respect of Compensation Costs and expenses applies to each and every event

In this example, the endorsement has been used to modify the standard policy excess where any claim is submitted relating to work involving the application of heat (as specified in points 1-4).

In both instances, these endorsements were noted under the section of the policy schedule headed Endorsements.

Policy Endorsements will be specified by the insurer (and explained to you) at the quotation stage of the policy, before incepting cover. It is important to read all quotations in full as the endorsements may be lengthy or there may be multiple endorsements in place. It is not unusual to find endorsements placed on a quotation that would make the policy unsuitable for your needs, in which case you will need to find a more suitable policy or ask your broker for alternative quotations.

Endorsements are in place to help you reduce the likelihood of a claim being presented and can be taken as being good advice for preventing theft or for safer working practices.

A good example of this type of endorsement is shown below, and can be found on various commercial insurance policies;

F/4197/3 PORTABLE HAND TOOLS

We shall not be liable for any Damage resulting from theft or attempted theft unless all portable hand tools are stored in a locked tools chests(s), which are secured to the fabric of the building by chains approved to ‘Sold Secure’ Gold or a bar with a minimum thickness of 6mm and a closed shackle padlock conforming to at least CEN Grade 4, or protected by a method agreed by Us in writing, outside of Business Hours or whilst The Premises are unattended.

Expensive tools lying around an empty workshop are a temptation for would-be thieves. This example is protecting the insurer from claims made as a result of the policyholders failure to take reasonable precautions but also, if complied with, can help prevent unnecessary disruption to business should a theft occur.

The importance of reading your documents has already been mentioned, however, it is easy to get confused by wordy endorsements with terms you may not have heard before. If anything you read is not clear or you think should not apply to you then you should always seek the advice of your broker.

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