What Does Retroactive Restoration Mean?
Retroactive restoration occurs when an insured party does not lose any coverage after a covered claim is approved. Instead, the full coverage amount for the policy is automatically restored. This means that policyholders with policies that feature retroactive restoration will still have access to the full amount of coverage for the policy even if they have losses.
Insuranceopedia Explains Retroactive Restoration
Retroactive restoration is quite beneficial to policyholders because it prevents them from getting punished for filing a claim. Retroactive restoration is especially helpful if losses are discovered in the future for a covered period that has already passed.
This type of policy is desirable for policyholders, but it can be more costly for insurance companies.