Homeowners InsuranceQuestion 153 of 215
What is the purpose of an inflation guard endorsement on a homeowners policy?
a.It automatically increases the Coverage A limit during the policy term to keep up with construction-cost inflation
b.It pays additional living expense indefinitely
c.It pays the cost of building-code upgrades after a loss
d.It lowers the premium each year
Explanation
An inflation guard endorsement automatically increases the dwelling limit by a stated percentage (often pro-rated each quarter) during the policy term so that Coverage A keeps pace with rising construction costs. This helps the insured stay above the 80% coinsurance threshold and avoid being underinsured at the time of a loss. Code-upgrade costs are handled by a separate Ordinance or Law coverage.
Law Reference: ISO Homeowners — Inflation Guard endorsementPractice all 215 questions free — no signup required.
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