Automatic Reinstatement Clause

What Does Automatic Reinstatement Clause Mean?

An automatic reinstatement clause is a provision in property insurance contracts that states the insurance company will restore the coverage limit to its original amount, without the need for legal action, after paying the insured for a claim.

Insuranceopedia Explains Automatic Reinstatement Clause

The reinstatement of a policy’s limit may sometimes involve a process, such as the insured submitting a request after the claim is paid. The insurer may also require an additional payment before reinstating the coverage.

However, with an automatic reinstatement clause in the policy, no such process is necessary. The insurer automatically restores the terms of the policy immediately after paying a claim.