If the coverage limit in Bob's commercial property policy increases by 2% upon renewal, which optional coverage might he have included?

The correct choice is the optional coverage known as Inflation Guard. This coverage is specifically designed to protect against increasing costs due to inflation. With Inflation Guard, the coverage limit is automatically adjusted at each renewal, often by a specific percentage, which in this instance is 2%. This ensures that the insured property maintains adequate coverage in relation to rising replacement costs and market values over time.

While Replacement Cost Coverage deals with how losses are settled (i.e., replacing damaged property at current costs rather than its depreciated value), it does not inherently include adjustments for inflation in the coverage limits. Loss of Income Coverage pertains to business interruption, providing a safety net for income lost during property damage repairs but doesn’t directly adjust coverage limits based on inflation. An Extended Reporting Period usually comes into play for claims made policies, addressing the time frame in which claims can be reported following policy termination, and is unrelated to the adjustment of coverage limits based on inflation.