British Columbia Fundamentals of Insurance (FOI) Practice Test 2026 – Your Comprehensive All-in-One Guide to Exam Success!

A policy endorsement in insurance is a document that modifies the existing terms of an insurance policy. It is essentially a written amendment that can either add, modify, or restrict coverage. When an endorsement is issued, it becomes part of the original policy, and its provisions are designed to clarify or change the insurance contract's terms.

Understanding endorsements is crucial in the field of insurance, as they allow insurers to be flexible and responsive to the changing needs of their clients or the specifics of a situation. For example, if a homeowner adds a new room to their house, an endorsement may be used to expand the coverage to include that additional space.

The other options don't accurately capture the function of an endorsement. While it is true that an endorsement can alter the coverage (which is why it may be considered correct), the main aspect emphasized here is its role in formally modifying the policy, which is a broader interpretation of 'alteration' to include additions and restrictions, rather than simply changing existing coverage. Thus, the primary function of endorsing a policy aligns with altering or expanding coverage.