Full Endorsement: Everything You Need to Know
Examples of a full endorsement are a life insurance policy and a driver's license, which can act as amendments to a contract or document.3 min read
2. Additional Endorsement Types
3. Check Endorsements
4. Additional Check Endorsements
5. Business Interruption Insurance Coverage
Examples of a full endorsement are a life insurance policy and a driver's license, which can act as amendments to a contract or document.
Endorsements signify a show of public support for a person, product, or service. A common example is when a paycheck is signed by an employer. The signature acts as authorization and confirmation of the intent to pay the employee and endorses the money transfer from the business account to the employee.
A specific type of endorsement is an insurance endorsement. This comes in the form of additions or modifications to the original policy. A policy provision that is modified, for example, to extend monthly income benefits to a beneficiary after the death of the policyholder (also called the insured) is called a rider or endorsement. It should be noted that the policy premium will rise due to increased risk and to cover the additional benefits provided to the policyholder and associated beneficiary or beneficiaries.
Additional Endorsement Types
There are additional types of endorsements to know about:
- License Endorsement - offers the licensee added privileges and rights, such as adding on permission to ride motorcycles or drive additional cargo vehicles
- A Form of Approval - when a person or entity publicly declares support for another person, product, or service
- Promissory Note - when the endorser commits to guaranteeing payment in the instance that the principal borrower defaults
- Contract - indicates the contents and terms of the contract are approved
A common type of endorsement is a check endorsement. This is when the payee (person receiving the check) signs the back with the name as it appears on the front of the check. This signature acts as a way to confirm the payment and transfer of the monetary value indicated on the check. If more than one person is listed as a payee on the check, the endorsement will be based on how the names are written. For example, if John Doe AND Jane Doe are listed, both must sign the check. If the check only lists one name, John Doe OR Jane Doe, only the name listed must sign. In the case where two names are listed without "and" or "or," assume "and" and sign both names.
Additional Check Endorsements
Check endorsements can also extend to include:
- Conditional - places a time restriction or limit on when the check will be paid
- Restrictive - limits or restricts the ability to negotiate, with the most common form being "for deposit only"
- Special - allows the payee listed on the check the ability to make the check payable to another entity or person
- Blank - lets the payee sign the check as it appears on the front of the check. If the name is misspelled, the payee should endorse with the incorrect spelling but sign with the correct spelling.
- Qualified - protects the endorser from any responsibility if the check is returned; adding the term "without recourse" is an example of a qualified endorsement
Business Interruption Insurance Coverage
Endorsements appear often in the realms of business. It is common for commercial property insurance policies to include coverage for potential business income loss through endorsements. This type of endorsement is made to protect the insured from the effects of direct loss, damage, or destruction to the insured property. When this occurs, the insurer is only required to pay when an interruption of business occurs that limits or stops the ability to generate income. The amount paid can be limited to the amount of business income lost and is not required to be the total amount listed on the policy.
Business income endorsements as written by the Insurance Service Office (ISO) — and other insurer forms —include an expanded time period of 30-days for restoration. Restoration indicates the time of loss given until the time of repair or replacement. A business income endorsement also provides "additional coverages" that covers direct physical loss, damage, or destruction to electrical, steam, gas, water, sewer, telephone, and other utilities or services that affect the business. Having this type of endorsement will help a business sustain itself under unforeseen circumstances.
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