Automatic Reinstatement Clause
Definition - What does Automatic Reinstatement Clause mean?
An automatic reinstatement clause is a provision in property insurance contracts that states that the insurance company will set back the insurance coverage's limit to its original agreement without a legal prompting after it pays the insured for a claim.
Insuranceopedia explains Automatic Reinstatement Clause
The reinstatement of a policy's limit might involve a process, such as the insured submitting a request after the claim is paid. The insurer might also ask for an additional payment before reinstating the insured.
With an automatic reinstatement clause in one's policy, however, there is no need for such a process. The insurer simply reinstates the terms of the policy right after paying a claim.