What Does Inflation Guard Endorsement Mean?
An inflation guard endorsement is an option found in home insurance policies that adds a percentage to the coverage over time. The increased insurance limit is to cover the eventual cost of rebuilding the insured dwelling which is projected to be higher than its purchase price.
Insuranceopedia Explains Inflation Guard Endorsement
Inflation will increase the price of rebuilding one's house. It might even cost more than the money spent on purchasing it. As a safeguard from underinsurance, this endorsement might be bought along with one's home insurance. This option adds a percentage to the coverage over a period of time such as 5 percent after three months of the policy's effectivity. It is advised that the insured consult with the broker about the effect of inflation on rebuilding cost and his or her insurance before purchasing this endorsement to avoid either paying too much for premiums or being underinsured.