How much do policy limits increase annually under the BOP Inflation Guard Endorsement?

The correct answer is that the policy limits increase by 8% annually under the Businessowners Policy (BOP) Inflation Guard Endorsement. This endorsement is designed to protect businesses from inflation by automatically adjusting the coverage limits in response to the rising costs of property and repairs.

By setting the annual increase at 8%, the endorsement helps ensure that the coverage remains adequate over time, particularly in environments where inflation may erode the purchasing power of the insurance coverage. This proactive measure reduces the likelihood of underinsurance, which can happen when property values rise faster than the original policy limits set at the time of the policy initiation.

While the other percentages presented in the choices may sound plausible, they do not align with the standard increase provided under the Inflation Guard Endorsement in a BOP, demonstrating the importance of knowing the specific provisions of insurance policy endorsements to understand how they impact coverage effectively.