Endorsements and Supplemental Coverages - New Appleman on Insurance Law Library Edition, Chapter 21

Endorsements and Supplemental Coverages - New Appleman on Insurance Law Library Edition, Chapter 21

The subjects of Chapter 21 are endorsements and riders contained within an insurance policy.  Endorsements are included in insurance policies to modify the coverage contained within the policy form.  For example, endorsements can change the entity that is covered, or even the amount of coverage afforded.  This chapter walks the reader through the policy parts and identifies and interprets the endorsements contained within the insurance policy. 

Section 21.01 addresses the parts of the insurance policy, including the endorsements.  It explains that an insurance policy is customized for the insured through the "package" of endorsements.  It further discusses the fact that because the endorsements change the policy form, a policy should, in a sense, be read backwards, i.e., the endorsements should be read first.  The section provides practical advice for reading the policy and its endorsements. 

Section 21.02 examines the function of endorsements.  Section 21.02[1] explains that the endorsements may add additional insureds or risks to the policy.  To the extent an additional premium would be charged, the endorsements would constitute separate and severable contracts.  Section 21.02[2] notes that often endorsements serve to modify or remove the effect of a term or exclusion within the policy and, therefore, supersede that term or exclusion.  Section 21.02[3] discusses an example of supplemental coverage that can be provided via an endorsement - medical payments coverage.  Section 21.02[4] explores various endorsements that serve to limit certain types of coverage based on the insured's particular business or activities.  Section 21.02[5] addresses the "mandatory" endorsements required by the states.  These are generally standard form endorsements drafted by the Insurance Services Office.  These endorsements may deal with warnings, cancellation, or nonrenewal requirements, or changes to certain form coverages like the pollution exclusion.  Examples of these endorsements are included as appendices to this chapter.

Section 21.03 discusses how endorsements are interpreted.  Endorsements are generally interpreted like the policy form and should be given operational meaning.  If possible, the policy and endorsements should be read together.  If, however, there is a conflict between the policy form and endorsement, the endorsement controls because it was executed after the policy form.  Endorsements generally should not be read to nullify another part of the policy.  Endorsements become part of the policy and, therefore, must be given effect.   Importantly, an insured is charged with knowing the contents of the entire insurance policy, including the endorsements.  So, it is important to read every portion of the policy. 

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