Car Insurance Endorsements: What they are & why they matter

No matter the country you live in, car insurance is one necessity that can not be avoided. However, if you opt not to have one for yourself, it’s not just risky but can have some pretty bad personal, legal, and financial consequences, including -

• Legal penalties
• Financial liability
• Limited protection
• Difficulty in obtaining insurance in the future
• Personal consequences like stress and more

Speaking of the Philippines, car insurance here is a necessity, with the Compularosy Third-Party Liability (CTLP) insurance being a mandatory legal requirement, and for added coverage, comprehensive insurance is highly recommended. In both cases, there is a policy handed over to the policyholder, and sometimes there is an error/mistake/omission, and that’s where endorsement as a tool comes into play.

Also Read: Compulsory Third-Party Liability Insurance (CTPL) vs. Comprehensive Insurance: What's best for you?

In this article, we’ll be discussing this important tool in detail, as getting a policy with an error though might be rare but is a possibility. But before that, let us first understand the car insurance policy/contract and its content.

Car insurance contract

So far, we are clear that car insurance is essential, and in the Philippines, it is divided into two major categories - the CTPL and comprehensive. In both these cases, what’s common is an insurance policy that the insured receives from the insurer. Just like a car loan agreement, this one is essential for -

• Legal safeguarding
• Transparency & clarity
• Enforcement of obligations

This contract/policy is unique to each client and includes a bulk of information personal and insurance specifics, including -

• Personal details
• Vehicle details (type, age, brand, market value)
• Policy details (type, effective & expiration date)
• Coverage details (CLPL, theft, roadside assistance, acts of nature)

All these details may not always be accurate, and there’s a chance of error. It thus becomes important to go through the loan policy carefully as soon as you are handed one by your policyholder.

Understanding Endorsement

What if there is an issue with the insurance policy? In such a case, it is advisable to raise the matter immediately with the insurance provider and get the matter resolved. This process of alteration is referred to as ENDORSEMENT.

Endorsement of car insurance policies

What is a car insurance endorsement? It refers to an amendment or modification to the existing car insurance agreement. It can be in the form of addition, removal, or modification of personal or coverage information. It provides policyholder flexibility to tailor the insurance as needed.

Key features -

• Endorsement is primarily initiated by the policyholder in a car insurance policy.
• Depending on the insurance provider, there might be cancellation of the previous policy with error and issue of a new modified policy.

Types of endorsement of car insurance policies

Car insurance endorsement is categorized into two parts - Basic and Advanced. While the former deals with modification in personal/vehicle details like name, address, model name/number, etc, the latter is associated with the addition and alteration of comprehensive car insurance coverage.

A few examples of endorsement -

Type of Endorsement	Example
Basic	In case you notice a typo in your car insurance policy and request revision.
Advanced	Your policy does not include roadside assistance or acts of nature coverage, and you realize that it might come in handy, in such a case, you can ask for specific modifications.

Different kinds of car insurance endorsements (from straightforward to complex)

It is known that car insurance endorsements are of two types - basic and advanced. However, we’d like to make things more clear and thus would like to list a few different (most common) car insurance endorsements. Starting from the most straightforward to the more complex kinds -

• Changes made to the name of the insured car’s owner, i.e., the insured
• Changes made to the address of the insured
• Changes made to the phone number of the insured
• Correction of engine number of the insured vehicle
• Correction of chassis number of the insured vehicle
• Correction of the registration number of the insured vehicle
• Correction of fuel type of the insured vehicle
• Alterations/modifications made to the exterior or interior of the insured vehicle
• Alteration/modification to the policy coverage, inclusion of add-on coverage, modification done to the insured vehicle, addition or removal of anti-theft devices
• Mistake in the premium calculation

Cost of endorsement of car insurance policies

Note that depending upon the type of amendment or modification raised by the policyholder, endorsements can come at an additional cost. However, it’ll give you peace of mind by ensuring that when needed, your claim will be processed smoothly with no error acting as a hurdle, and/or you are well protected against the risks.

Validity of endorsement of car insurance policies

As soon as policyholders are handed the insurance paperwork, as advised, they go through it thoroughly, and that’s when the endorsement alarm is usually raised. The alteration/modification/amendment job is done either before or during the policy term.

What about the validity of insurance endorsement? It mostly extends until the policy expires; however, the specifics may change based on the kind of endorsement and the agreed-upon terms between the insurance company and the policyholder.

Example -

Say, fifteen days after the policy is issued, the policyholder decides to opt for roadside assistance and loss of use coverage, and they submit a request for the same endorsement. After making the required modifications, the insurance provider sends the revised documents, which will remain in effect until the policy is renewed/terminated/changed.

Frequency of endorsement of car insurance policies

If you are of the view that a policyholder can make as many endorsements as he/she prefers, then my friend, you are mistaken. The fact is, endorsement of a car insurance policy should not exceed once or twice a year.

It is advisable to refrain from making frequent endorsements as it may confuse updating records, which might cause trouble while making the claim. However, the frequency of endorsement also depends on two factors -

• Type of endorsement
• Terms & conditions of the policyholder
• Endorsement procedure of the insurance provider

Car modification and endorsement

In a scenario where you have modified your insured car and are thinking there’s no need to inform the policyholder. We’d like to inform you that any modification to the car must be reported to the insurance provider asap. Now, the insurer will help you whether or not the modification calls for an endorsement.

What about premium? Do endorsements have an impact on insurance premiums? The answer is Yes. Depending on the nature of the modification, endorsement can either raise or decrease the insurance premium. For instance, if you have installed a dash cam in the car, it will lower the premium. On the other hand, if inclusions improve your car’s appearance, it will increase the premium. Further, if these modifications are made during the policy term, endorsement is a must.

Note that the insurance provider can reject your claim on the grounds of lack of transparency in the case where the modification is not disclosed.

Also Read: Modified car insurance in the Philippines: All you need to know

Bottom line

Car insurance endorsements are a great tool that allows car owners to amend/modify/customize their insurance policy. Apart from correcting the typos and calculations, its big contribution lies in enhancing the policy to the specific needs of the policyholder. So, if one fine day after getting the insurance documents, the policyholder feels like getting protection against natural disasters, personal accidents, loss of use, towing, or roadside assistance coverage, endorsement helps get it all for.

If you own a car and have received your car insurance paper lately, take time to review them thoroughly. Get the required amendments done asap, or else you might find yourself in trouble while filing for a claim.

Also Read: Car insurance sorted? Now follow these essential steps