What Is an Endorsement?

What Is an Endorsement?

Let me explain what an endorsement really means. It can be a signature that authorizes the legal transfer of a negotiable instrument between parties, or it might act as an amendment to a contract or document, such as a life insurance policy or a driver's license. You could also think of it as an outward expression of approval for a person, product, or service.

Key Takeaways

An endorsement has various meanings, but most revolve around approval or authorization. It often refers to a signature or stamp that authorizes payment or fund transfers, like when you sign a check. Endorsements can also be formal updates to existing documents or visible shows of support for a brand, individual, or offering.

Understanding Endorsements

While endorsements have several distinct meanings, many tie back to approval or authorization. In business or legal settings, an endorsement is a signature or equivalent stamp that authorizes payments, fund transfers, or other financial transactions. It can also be a note, amendment, or clause in an official document or contract that modifies or specifies terms.

In a broader sense, an endorsement is your way of saying or showing agreement with or support for something or someone, and the endorser might or might not get paid for it. For instance, a WNBA player might endorse Nike shoes in a commercial, or an actor could back a political candidate by appearing at rallies or giving speeches.

Types of Endorsements

Let's break down the main types you should know.

Signature Endorsements

A signature itself is an endorsement. When an employer issues a payroll check, it authorizes the transfer of money from the business account to you, the employee. Signing the check counts as the endorsement, proving the payer's intent to transfer those funds.

In a transaction where someone pays with a check, the recipient must endorse it with a signature on the back to complete the transaction and allow the money transfer. If the check lists more than one payee, endorsement rules vary based on how the names are written—for example, 'John Doe and Jane Doe' requires both signatures, while 'John Doe or Jane Doe' needs just one.

Signing the back of a check to cash it is a blank endorsement, and anyone can then cash or deposit it, even if it's not made out to them.

Insurance Endorsements

Insurance endorsements are amendments that modify or add to the original policy. For example, a provision that continues monthly income to a beneficiary after the insured's death is an endorsement, also called a rider. This usually increases the premium because of the added benefits and risk to the insurer.

License Endorsements

License endorsements add rights or privileges to a driver. A motorcycle endorsement, for instance, lets you operate a motorcycle on public roads. They can also specify authorized vehicles or cargo types.

On the flip side, restrictions forbid certain behaviors, like not driving without corrective eyewear if you have that restriction.

Endorsements and Promoting

Endorsements can represent support or approval. You might see a person or organization publicly declare support for someone, a product, or a service. Commonly, government officials, influencers, or organizations endorse political candidates.

In the U.S., early endorsers included sports figures like Honus Wagner, who promoted baseball bats in 1905 and other products, though he stopped a tobacco company from using his image on cards to avoid encouraging kids to buy cigarettes.

A newspaper might endorse a candidate by recommending votes in an editorial. In marketing, supporters are often 'influencers' who use social media to promote their endorsements.

What Is an Endorsement With Respect to Insurance?

In insurance, it's known as a rider—an amendment that adds to or modifies the original policy.

What Are Other Kinds of Endorsements?

The signature on a check's back authorizes fund transfers. A public statement approving a product or political candidate is another type.

How Do You Endorse a Check?

Simply sign it on the back—that's the basics. But there are variations: a blank endorsement is just your signature, allowing anyone to cash it. Adding 'for deposit only' makes it a special endorsement, restricting it to deposit. Including an account number creates a restrictive endorsement for a specific account. Many banks now require 'mobile deposit' markings for security in digital banking.

The Bottom Line

An endorsement is an amendment or clause to a document or contract, an authorizing signature, or a public declaration of support. Types include insurance, signature, and license endorsements. Commercially, it means someone—often a celebrity—gets paid to promote a product, a practice that's evolved into today's social media influencers.