Wordings Library
Valuation
Clause explained
Escalation Clause
Allows insured values to increase by an agreed percentage during the policy period.
01
Meaning
Allows insured values to increase by an agreed percentage during the policy period.
02
Why insurers use it
To accommodate inflation or project-cost movement without automatic unlimited exposure.
03
Effect on coverage
May reduce underinsurance risk but does not replace a sound valuation or cover increases beyond its percentage.
04
Illustrative example
Construction costs rise 12% during the year while the policy includes 10% escalation.
05
Claim consequence
The remaining value gap may still trigger average or leave part of a total loss uninsured.
06
What the insured should negotiate or check
Check percentage, premium adjustment, start/end values, project delays, currencies, freight, duties, and indexation.
Policy-wording boundary: This is educational analysis. Confirm the complete policy, schedule, endorsements, applicable law, and written insurer position for any specific placement or claim.