Arkansas Insurance Adjuster Practice Exam

The coverage limit in Bob's commercial property policy goes up 2% every time the policy renews. Which optional coverage might Bob have included as part of his insurance package?

1. Inflation Guard

2. Replacement Cost

3. Advanced Premium

4. Agreed Value

The correct answer is: Inflation Guard

Bob may have included the optional coverage of Inflation Guard, which increases the coverage limit in his commercial property policy by 2% every time the policy renews. The option of Replacement Cost is incorrect because it covers the cost to replace damaged or lost property with new property of similar type and quality, but it does not have a provision for increasing the coverage limit. Advanced Premium is also incorrect as it refers to a method of paying insurance premiums, not an optional coverage in a policy. Agreed Value is incorrect because it is a method of determining the value of insured property in the event of a loss, not a coverage option.