Retroactive Restoration

What Does Retroactive Restoration Mean?

Retroactive restoration ensures that an insured party does not lose coverage after a covered claim is approved. Instead, the full coverage amount of the policy is automatically reinstated. This allows policyholders with retroactive restoration policies to retain access to the policy’s full coverage amount, even after experiencing losses. This feature appears most often in business policies that include aggregate limits, such as general liability insurance, where one paid claim could otherwise reduce the coverage available for the rest of the policy term.

Insuranceopedia Explains Retroactive Restoration

Retroactive restoration benefits policyholders by ensuring they are not penalized for filing a claim. It is particularly advantageous if additional losses are discovered later for a covered period that has already passed. It is a useful provision in policies that could see multiple costly events in a single year, including cyber liability coverage for small businesses, where one breach can produce months of follow-on costs.

While this feature is highly desirable for policyholders, it can be more expensive for insurance companies to provide.