What is an "endorsement" in an insurance policy?

An endorsement in an insurance policy refers to a change or addition to the terms of the policy. This can include alterations such as modifying coverage limits, adding new coverages, excluding certain items from coverage, or updating the policy details to reflect changes in the insured property or circumstances. Endorsements are often used to tailor a standard insurance policy to better fit the unique needs of the insured party, ensuring they have the appropriate coverage for their specific situation.

The other options present concepts related to insurance but do not encapsulate the definition of an endorsement. A mandatory coverage option would refer to certain coverages that must be included in a policy, rather than changes or additions made after the policy is issued. A fee charged for processing claims relates to the administrative side of claims handling, not the policy itself. A type of exclusion refers to specific situations or conditions that are not covered by the policy, which is different from the purpose of an endorsement that can expand or modify coverage. Thus, the correct choice effectively highlights the fundamental nature of an endorsement in insurance practices.