Reinstatement Provision

What Does Reinstatement Provision Mean?

A reinstatement provision in a life or property insurance policy is a clause that allows the policyholder a limited period of time to reinstate their policy after it has lapsed. To do so, the policyholder must provide evidence of insurability and pay any outstanding premiums, along with applicable interest.

Insuranceopedia Explains Reinstatement Provision

Policies can lapse for various reasons, including the failure to pay premiums. Without a reinstatement provision, a lapse leads to the termination of the policy, requiring the policyholder to re-apply if they wish to resume coverage. In this case, they may encounter higher premiums or less favorable policy terms.

With a reinstatement provision, however, the policy can be fully restored to its original coverage under the same conditions. The insurance company may retain the right to attach a rider to the policy, limiting coverage based on the policyholder’s updated health history.