What is the definition of Inflation Guard Clause?

The Inflation Guard Clause, as the name suggests, guards against inflation. This is a provision that a homeowners insurance policy can add to the policy to protect against the increases in construction costs and materials costs. There may also be added costs such as rebuilding the house with an existing foundation and other activities like debris removal.

The inflation guard clause automatically increases the face amount or the coverage. This is done at time intervals specified in the policy. Of course, the premium will usually also increase along with the increases on the face amount.

The inflation guard clause only reflects the present structure and not the improvements made.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage