Which statement accurately distinguishes endorsements from exclusions?

• A. Endorsements always increase premiums
• B. Endorsements add, remove, or modify coverage, while exclusions identify perils not covered
• C. Endorsements are optional only
• D. Exclusions are used to delete coverage entirely

Answer: (B)

Endorsements change the policy’s terms. They can add new coverage that isn’t in the base form, remove coverage that was included, or modify how a coverages works—such as changing limits, deductibles, or who is insured. Exclusions, by contrast, lay out specific risks or situations that the policy will not cover at all. So an endorsement is about altering what is insured, while an exclusion is about narrowing what remains covered by stating what is not insured. For example, you might add an endorsement to insure against a peril like flood (if your base policy didn’t include it) or to adjust limits, while an exclusion would say that flood damage itself isn’t covered unless the policy includes that endorsement. Endorsements aren’t inherently mandatory or always more expensive, and exclusions don’t erase the entire policy—they simply remove coverage for certain perils while other coverages may still apply.