Waiver Of Restoration Premium

What Does Waiver Of Restoration Premium Mean?

A waiver of restoration premium is a provision in an insurance policy that allows the policyholder, after receiving benefits from a claim, to maintain the same level of coverage as before the payout. Without this waiver, the policyholder may need to pay an additional premium to retain the same level of coverage. This kind of provision shows up most often in business policies that carry aggregate limits, such as general liability insurance, where a single large claim can chew through coverage that still needs to last the rest of the policy year.

Insuranceopedia Explains Waiver Of Restoration Premium

Conversely, a policy may no longer provide coverage once claim payouts have reached its limits. Some policies specify maximum limits for both individual events and the overall policy term. If restoring coverage is not an option, policyholders can consider purchasing secondary or supplemental policies to mitigate the risk of a lapse or lack of coverage when the primary policy reaches its limits. For businesses, that often means layering a commercial umbrella policy on top of the underlying coverage so a single bad year does not leave the company exposed.