In which situation would the Liberalization Condition apply?

The Liberalization Condition pertains to the situation where an insurer makes changes to a policy that broaden coverage without additional costs. This condition is designed to ensure that policyholders benefit from improvements in coverage that the insurer may offer in the future, even if those improvements occur after the initial policy was issued but before the policy renewal date.

When a policy is liberalized, it means that the insured will automatically receive the enhanced coverage without needing to pay an additional premium. This principle protects the consumer by ensuring they have access to any improved benefits that may arise from changes in the insurer's offerings.

In contrast, the other scenarios mentioned do not fit the Liberalization Condition. Charging additional premiums for coverage would not be considered liberalization, as it requires an extra cost to the policyholder. Cancelling a policy goes against the intent of liberalization because it removes coverage altogether. Lastly, claims exceeding policy limits do not pertain to changes in coverage or benefits but rather relate to the conditions of coverage that were agreed upon at the time of policy issuance.