What is Reinstatement Clause?
Reinstatement Clause A provision in insurance or reinsurance contracts that specifies the terms under which coverage is restored after a claim payment, typically requiring an additional premium. Most common in catastrophe reinsurance, it allows for the policy limit to be reset following a loss event.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Reinstatement Clause” Used in Practice?
The reinsurance agreement included a reinstatement clause allowing the cedant to restore the coverage after a major catastrophe loss, subject to an additional premium.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Reinstatement Clause?
A provision in insurance or reinsurance contracts that specifies the terms under which coverage is restored after a claim payment, typically requiring an additional premium. Most common in catastrophe reinsurance, it allows for the policy limit to be reset following a loss event.
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