Wordings Library
Limits
Clause explained
Automatic Reinstatement
Restores an exhausted material-damage limit after an insured loss, commonly in return for additional premium.
Meaning
Restores an exhausted material-damage limit after an insured loss, commonly in return for additional premium.
Why insurers use it
To maintain cover after a loss while controlling how often and on what terms the limit can be restored.
Effect on coverage
May protect against a second loss, but reinstatement can be limited, conditional, or unavailable for some sublimits.
Illustrative example
A fire consumes part of a property limit and a later storm causes another loss in the same period.
Claim consequence
If reinstatement is absent or not completed, the remaining limit may be inadequate for the second event.
What the insured should negotiate or check
Check number of reinstatements, additional premium, insurer consent, catastrophe sublimits, and timing.