Glossary

Inflation guard

An endorsement that raises your coverage limits a set percentage each year so they keep pace with rising rebuilding costs between renewals.

Also called: inflation guard endorsement, HO 04 46, automatic increase in insurance

Inflation guard automatically increases your property coverage limits during the policy term so they track rising construction costs. In the ISO program the endorsement is HO 04 46. It raises the Coverage A, B, C and D limits by an annual percentage, applied pro rata through the term. Depending on the insurer, the percentage is one you pick, such as 4%, 6% or 8%, or one tied to a building-cost index.

Say your dwelling limit is $400,000 and the annual increase is 6%. Six months in, the limit has grown about 3%, to roughly $412,000. At the full year it reaches about $424,000. If a covered loss happens midway, the larger limit applies. At renewal, the new limit becomes the starting point.

Do not treat it as a substitute for a fresh valuation. A fixed percentage or a lagging index can fall behind real costs, especially after a remodel, a storm that sends labor prices up, or years when materials jump. Many insurers apply their own annual limit adjustments even without the endorsement, so find out which you have. See inflation guard and automatic coverage increases and inflation, rebuilding costs and underinsurance, and check the limit against a current replacement cost estimate at least once a year.

Last reviewed October 10, 2026

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Related terms

Replacement cost What it would cost to repair or rebuild with materials of like kind and quality at today's prices, with no deduction for age or wear. Dwelling coverage (Coverage A) The part of a homeowners policy that pays to repair or rebuild the house itself, including attached structures such as a garage, porch or deck. Insurance to value The ratio of the coverage on a home to what it would cost to rebuild it today; 100% means the limit matches the rebuild cost. Extended replacement cost Extra dwelling coverage, often 25% or 50% above the Coverage A limit, that helps pay to rebuild when the actual cost after a loss exceeds the limit. Underinsurance Carrying a coverage limit below what a loss would cost to repair or rebuild, which leaves the owner to pay the gap.

Related guides

Your annual homeowners insurance review Compare this year's renewal declarations page with last year's, recheck your rebuild cost and discounts, and decide whether to shop. A step-by-step review. Extended and guaranteed replacement cost coverage Extended replacement cost adds a set percentage above your dwelling limit; guaranteed pays to rebuild whatever it costs. How each works, and the catches. Your home insurance premium jumped: what to do Work out whether filed rates, your coverage, your rating factors or lost discounts drove the jump, then fix what you can and shop the rest before renewal. How much dwelling coverage do I need? Insure for the cost to rebuild at today's local prices, not your purchase price or mortgage. A six-step method, the 80% rule worked through and when to recheck. Inflation, rebuilding costs and underinsurance Rebuilding costs rose nearly 30% in five years. How that leaves limits short, what research says drives underinsurance, and how to keep your limit current. Inflation guard and automatic coverage increases Inflation guard raises your dwelling limit by a set percentage or an index each year. How it works, what it misses and why it can't replace a rebuild estimate.

Related tools

My home insurance went up: what to do A guided path for a renewal increase: find out why it rose, check your dwelling limit against rebuild cost, then compare quotes on the same coverage. Home insurance renewal increase checker Split a homeowners renewal increase into the part from a higher dwelling limit and the rest, with a short list of what to ask and do before renewal.