Premiums and Benefits of Insurance Policy [closed]

Question

Are there any possible situations where the benefit of a policy be increased without increasing the premium for a limit policy that covers losses up to a certain point?

Would inflation/deflation be an example?

Answer 1

An insurance policy is a contract. You agree to pay a regular amount of money (premium) and they agree to pay you some amounts under certain circumstances. Nothing requires either party to do more than that. It is extremely unlikely that a commercial business will at any point say "I know we agreed that we should pay you $100,000 if you were injured, but we've decided to pay you $110,000, even though we don't need to." (Just like it's unlikely that you volunteer to pay more than the required premium because you feel like it). In that sense the benefit of a policy is not going to be increased.

On the other hand insurance contracts can be cancelled, and the insurance company might lose your business. If the company were to find that their insurance product was no longer competitive, they might decide to offer you more benefits if you kept your policy going: "If you keep paying your premiums, then we will agree to pay you $110,000 if you are injured, instead of the $100,000 we said previously."

This would be very unusual. Firstly because prices for insurance almost always rise rather than fall, but also because it's much easier to change the premium paid than it is to change the benefits. Most people decide the benefits they want, and then shop for the cheapest policy that delivers those benefits.

Inflation is absolutely not a factor. If you previously thought you needed $100,000 of coverage, and because of inflation you now think you need $110,000 to cover the costs of whatever you were insuring against it is up to you to decide that and request the extra coverage from your insurance company, almost certainly paying a larger premium.