What Is Inflation Guard Coverage?

Inflation guard coverage increases your home’s dwelling coverage limit to keep pace with inflation.
Written by Natalie Todoroff
Reviewed by Melanie Reiff
Inflation guard coverage is an optional endorsement you can add to your
homeowners insurance policy
to help your coverage limit keep up with the rising rate of inflation. With it, you won’t be stuck paying tons of money out of pocket if you need future repairs. 
As the economy changes, so should your homeowners insurance policy. With inflation at a record high, it may be time to consider adding an inflation guard endorsement to your homeowners insurance policy. 
Inflation and homeowners insurance coverage can get complicated on their own. But put them together? It could be enough to make your head spin. That’s why
, your favorite policy shopping genie for home and
auto insurance
, is here to break it all down. 
Read on if you’re ready to learn a little more about how inflation protection applies to your home insurance policy.  
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What is inflation guard coverage? 

To understand what inflation guard coverage is, you’ll first need to know a little bit about how homeowners insurance is calculated. 
Your homeowners insurance coverage is based on the cost to rebuild your home with comparable materials. During periods of high inflation, the price to rebuild your home goes up. 
An inflation guard endorsement (or “inflation guard coverage”) increases your coverage limit to account for those rising costs of construction and materials. 
Inflation guard coverage primarily applies to your dwelling coverage—the part of your homeowners insurance policy that protects the physical structure of your home. 
However, in some instances, it can also include increased protection for your contents, other property structures (e.g., sheds, fencing), and additional living expenses. 
Your policy premium will increase with an inflation guard endorsement in place. The exact rate is typically calculated at the end of the annual policy renewal period, and your premium will not increase at the same rate as inflation to account for inflation
Although how much your rate goes up depends on your specific policy, here’s a general guide to how much more you’ll pay on your annual premium with inflation guard coverage:
  • 4% inflation, 2% increase on premium 
  • 6% inflation, 3% increase on premium 
  • 8% inflation, 4% increase on premium 

What are the benefits of an inflation guard endorsement?

Sure, you may end up paying more on your premium with an inflation guard endorsement—but it could save you a ton of money in case anything detrimental happens to your home. 
Say your home is insured for $200,000, meaning that if it gets damaged and you find yourself needing to rebuild it, your homeowners insurance company will (simply speaking) cover $200,000 worth of labor and materials costs to rebuild it. 
But let’s say that you need to rebuild during a period of high inflation, and now the cost of a rebuild has jumped up to $350,000. Without an inflation guard endorsement, you would have to pay the additional $150,000 out of pocket. 

How do I know if I need an inflation guard endorsement?

Although adding inflation guard coverage can be beneficial for many homeowners, not everybody needs it. An inflation guard endorsement is only really useful if the home you are in is your forever home or if you intend on making your home a large part of your will. 
If you bought your home as a fixer-upper and plan on selling it when the price is high, you may not really benefit from an inflation endorsement in that instance either. 
Key Takeaway An inflation guard endorsement is a type of inflation protection for your home insurance. Adding it will make your insurance more expensive, but it can help cover increased costs for materials and labor if you need to file a claim on your home. 

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If reading this has made you think, I really need inflation guard coverage, the next thing that comes to mind is: how the heck do I get it? 
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