Rosie LaRue's house burned down several hours after calling the insurance agent at 3:00 A.M, asking for an increase in her house coverage from $60,000 to $80,000. However, the insurance company denied liability on the extra $20,000 in coverage. Although she made an endorsement on her existing insurance contract, the insurance company had not made legally binding amendments by the time her house burned down. Therefore, the company is obliged only to pay the original $60,000. Under the insurance principle of indemnity, the policy allows insurance companies to compensate for the financial loss incurred on an agreed value. In this case, the house's value, as evaluated by the company, was $60,000. Although Rosie LaRue had called the agent asked for an increase in her coverage, she had not signed an endorsement that facilitated changing the original terms of coverage from $60,000 to $80,000. While it is legal to add an endorsement to a policy, the company often requires clients to adjust their premiums. That often requires paperwork detailing the changes to the policy and premium terms. In this case, while Rosie LaRue had only made a telephone call endorsing a change in her coverage, the insurance company had not made a legally binding amendment to the contract, only obligated to pay the original $60,000. An insurance endorsement is a legal amendment to an existing insurance policy and may result in changes in terms, especially on premiums. Rosie LaRue called her insurance agent requesting for an increase in her house coverage from $60,000 to $80,000. Her house burned down several hours later before the insurance could legalize her endorsement, which would result in her increase in premiums paid. Therefore, the company could only compensate for her original coverage of $60,000.
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