Automatic Increase In Insurance Endorsement

Updated: 19 January 2025

What Does Automatic Increase In Insurance Endorsement Mean?

An automatic increase in insurance endorsement is an addition to a property insurance policy that adjusts coverage limits for buildings in line with the inflation rate. It accounts for changes in construction costs, ensuring that the insured property’s coverage automatically increases whenever costs rise. This helps protect the insured from potential losses due to inflation.

This endorsement is also referred to as an inflation guard provision, inflation endorsement, or automatic increase in insurance provision.

Insuranceopedia Explains Automatic Increase In Insurance Endorsement

The cost of constructing a property can fluctuate over time due to changes in material and labor prices, which are reflected in an indicator known as the Construction Costs Index (CCI). The CCI typically shows a steady increase in contractor costs, making the automatic increase in insurance endorsement a useful addition to insurance policies.

Thanks to the CCI, insurance companies can track changes relevant to a property’s value. As a result, the insurance contract for the property is automatically adjusted to reflect these changes, addressing potential issues related to inflation.

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