ENDORSEMENTS AND VARIOUS TYPES OF

ENDORSEMENTS

INTRODUCTION

The term endorsement has a variety of meanings depending on the context in which it
is used. An endorsement can be a legal term that refers to the signing of a document that
allows for the legal transfer of a negotiable from one party to another; it can also refer to an
attachment to a document that amends or adds to it. Typically, an endorsement is an added
provision to an insurance policy, referred to as a rider, though it can also include additional
options such as various license endorsements.

VARIOUS TYPES OF ENDORSEMENTS

BREAKING DOWN 'Endorsement'

An endorsement may relate to a statement of support issued by a person or group.

This support may be given to another person, such as a political candidate, or a product.

Check Endorsements

When an employer signs a check, it is endorsing the transfer of money from the
business' account to the employee. The act of signing the check is considered an
endorsement, and is considered proof of the intent of the payer to transfer funds to the payee.

Insurance Endorsements

Insurance endorsements function as add-ons to the original agreement. If an insurance

contract has a provision stating that in the event of the policy holder's death, the family of the
policy holder will continue to receive the policy holder's monthly income for a period of
time, this is an example of an endorsement or a rider. Endorsements and riders cause the price
of the premium to rise as they provide a positive benefit.

License Endorsements

License endorsements give additional rights or privileges to the license holder. For
example, a driver may obtain a motorcycle endorsement on a drivers license, certifying he

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has completed the necessary steps to be legally permitted to operate a motorcycle on public
roads.

Endorsements of this nature may refer to the types of vehicles that can be operated, as
well as the type of cargo the vehicle may hold while being operated by the license holder. The
counter to a license endorsement is a restriction. A restriction places a caveat on the persons
right to operate a vehicle, such as with corrective eyewear restrictions for those whose natural
vision does not meet minimum requirements without the use of glasses or contact lenses.

Endorsements as Public Support

When using an endorsement as a form of approval, a person or entity states his

support of a particular person, product or service, most commonly through a public
mechanism. This form of endorsement can include a political figure publicly supporting
another person who is running for a position or an industry expert showing support for a
particular product that has become available.

BREAKING DOWN 'Advisory Endorsement'

Endorsements serve an important purpose in the policy underwriting process. They

can provide clarification as to what type of risks are covered or not covered, can be used to
include other parties in the policy, or can provide other important information such as the
geographic areas in which coverage applies. The endorsement is used to modify the forms
that the policy applicant must fill out, which is then included in the models that the insurer
uses when determining the risk associated with providing coverage.

The type of endorsement that is required on any type of joint account. Checks that are
payable to more than one party often require this joint endorsement. Joint endorsements are
generally required in order to prevent one individual on a joint account from cashing a check
without the knowledge or permission of the other.

BREAKING DOWN 'Joint Endorsement'

Joint endorsements are usually required by banks before they will cash certain kinds
of checks. Checks issued by the U.S. Government, such as tax refund checks, typically fall
into this category. Joint endorsements can be required regardless of whether the underlying
account is "tenants in common," "tenants with rights of survivorship" or "tenants by the
entirety."

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BREAKING DOWN 'Blank Endorsement'

The most well-known example of a blank endorsement is a check made payable to

"cash" and endorsed on the back with the signature of the account holder. Blank
endorsements are much more risky than pay-to endorsements. If the instrument is lost, it can
be negotiated (cashed in or deposited) by anyone who finds it. One of the banking regulations
set forth by the Federal Reserve. Regulation CC implements the Expedited Funds Availability
Act of 1987. This act sets certain standards for endorsements on checks that are paid by banks
and other depository institutions.

BREAKING DOWN 'Regulation CC'

Regulation CC is designed to require financial institutions to correctly process

endorsed checks. The rules pertaining to endorsements are intended to correctly identify the
endorsing bank. Unpaid checks are also required to be immediately returned to the paying
bank. An endorsement by a bank for a negotiable instrument, such as a banker's acceptance or
time draft, that assures the counterparty that the bank will stand behind the obligations of the
creator of the instrument.

BREAKING DOWN 'Bank Endorsement'

Bank endorsements are common in international trade, where the business parties are
typically unknown to one another. Banks stand in the middle by assuring good funds to the
recipient. A bank endorsement, in the case of a banker's acceptance, for example, is the
equivalent of a guarantee. An insurance policy endorsement that extends workers'
compensation coverage to other companies that the primary insured may do business with.
Alternate employer endorsement lists other companies that are to be included in the policys
coverage in the policys endorsement schedule.

BREAKING DOWN 'Alternate Employer Endorsement'

Businesses may find themselves short staffed on occasion, and will seek out the
services of a temporary employment agency to fill the gaps. Workers that are employed
through the temporary employment agency are covered under the workers' compensation
policy that the agency has purchased. When the employee is hired out to an outside firm, the

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firm that hires the employee will seek an alternate employer endorsement in order to protect
it from any lawsuits that the temporary employee may suffer.

A check or draft that must be paid via endorsement and delivery. Pay-to-order
instruments are negotiable checks or drafts that are generally written as "pay to X or order."
These instruments stand in contrast to pay-to-bearer instruments, which do not require
endorsement.

BREAKING DOWN 'Pay to Order'

The Uniform Commercial Code outlines the rules pertaining to pay-to-order

instruments. It specifies that ownership of this type of check can be transferred only via
endorsement someone who accepts a check must endorse it before transferring it
somewhere else. An insurance policy endorsement that automatically provides coverage to
any party that the named insured is contractually required to provide coverage to. A blanket
additional insured endorsement is most commonly found in liability insurance policies,
though it is typically not a common feature of the policy language.

BREAKING DOWN 'Blanket Additional Insured Endorsement'

Businesses often work with a variety of contractors, subcontractors, and other product
and service providers in order to complete jobs. For example, a construction company may
contract out work to electricians, structural engineers, and HVAC professionals to complete
specific components of a building

Blank or General:

An endorsement is to be blank or general where the endorser merely writes his

signature on the back of the instrument, and the instrument so endorsed becomes payable to
bearer, even though originally it was payable to order. Thus, where bill is payable to Sohan
or order, and he writes on its back Sohan, it is an endorsement in blank by Sohan and the
property in the bill can pass by mere delivery, as long as the endorsement continues to be a
blank

Special or Full:

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 If the endorser signs his name and adds a direction to pay the amount mentioned in
the instrument to, or to the order of a specified person, the endorsement is said to be special
or in full.

CONCLUSION

A bill made payable to Sohan or Sohan or order, and endorsed pay to the order of
Sohan would be specially endorsed and Sohan endorses it further. A blank endorsement can
be turned into a special one by the addition of an order making the bill payable to the
transferee. An endorsement is restrictive which prohibits or restricts the further negotiation of
an instrument. Examples of restrictive endorsement: Pay A only or Pay A for my use or
Pay A on account of B or Pay A or order for collection.

REFERENCES

http://www.investopedia.com/terms/e/endorsement.asp
https://caknowledge.in/types-of-endorsements/
http://www.shareyouressays.com/92277/seven-important-kinds-of-endorsements
http://vle.du.ac.in/mod/book/view.php?id=8409&chapterid=10737
http://moneyservicesbusiness.com/msb-services/check-cashing/endorsements/