What are the conditions under which an insurance policy may include a liberalization clause?

The correct choice highlights that a liberalization clause occurs when coverage is broadened without an increase in premium. This clause is designed to benefit the policyholder by automatically incorporating any new coverage provisions introduced during the policy term that enhances the coverage. Essentially, if an insurance company offers a broader coverage under the same terms without raising premiums, the policyholder automatically receives these benefits.

In the competitive landscape of insurance, companies aim to enhance their offerings to retain and attract customers. The liberalization clause allows policyholders to take advantage of improved coverage without having to pay more, making the policy more valuable. This aspect is crucial because it highlights the insurer's commitment to providing comprehensive coverage and maintaining customer satisfaction.

The other options do not reflect the conditions for a liberalization clause as accurately. The process isn't solely limited to policy renewal, it does not require an increase in premiums, nor is it contingent upon a request from the insured. A liberalization clause is specifically tied to the insurance company’s initiative to enhance coverage without a corresponding increase in cost to the insured.