Right of Reinstatement
Definition:
A policy clause that restores coverage limits after a claim is paid.
Explanation:
Without reinstatement, a large claim could reduce the available coverage for the rest of the policy term. With it, full limits are restored.
Example:
If you file a $50,000 claim under a $200,000 policy, reinstatement ensures you still have $200,000 in coverage for future claims.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.