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Waiver of Restoration Premium


The Waiver of Restoration Premium is a provision found in some reinsurance contracts. It states that the reinsurer waives their right to charge the ceding company an additional premium for reinstating a policy after a loss has occurred. As a result, this waiver offers financial relief to the ceding insurer by mitigating the cost of restoring coverage following a claim.


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Key Takeaways

  1. A Waiver of Restoration Premium is a clause included in an insurance policy that prevents the policyholder from being charged an additional premium to reinstate their insurance coverage after a loss has occurred.
  2. This waiver can save policyholders money by eliminating the need to pay a higher premium in the event of a claim, maintaining their original premium rate even after a covered loss has occurred.
  3. Not all insurance policies automatically include a Waiver of Restoration Premium, and it may need to be added as an endorsement or rider to the policy. Policyholders should consult with their insurance agent or read the terms and conditions of their policy to determine if this waiver is included or can be added for additional protection.


The Waiver of Restoration Premium is an important term in the business and finance realm, particularly in the insurance industry. It refers to an agreement made between an insurance company and the policyholder, which stipulates that the insurer will not charge a premium to restore the coverage limits to their original levels after a claim has been paid out. This waiver is significant as it benefits policyholders by preventing them from bearing additional financial burdens in the form of increased premiums due to filed claims. Consequently, it encourages policyholders to make claims without fearing negative financial repercussions, ultimately providing greater financial security and peace of mind in the face of uncertainty or loss.


Waiver of Restoration Premium is an essential tool in the realm of insurance and finance that serves to protect policyholders in the event of a loss or damage. The purpose of this waiver is to offer financial relief to insured individuals or businesses by not requiring an additional premium payment after a claim is resolved, provided the policy terms and conditions are met. As coverage limits are reduced after a certain amount has been used for claim settlements, the standard policy practice often demands a premium amount to reinstate the original coverage limits. However, the Waiver of Restoration Premium allows policyholders to avoid the burden of paying this supplementary charge, ensuring uninterrupted insurance protection.

Utilized predominantly in high-risk insurance coverage, such as property or casualty insurance, Waiver of Restoration Premium plays an integral role in maintaining the initial coverage amount following a claim. This waiver mitigates the impact of potential financial strain on the insured in the event of multiple claims throughout the policy term. Furthermore, it encourages policyholders to act on their claims when faced with a loss, creating transparency and trust between insurance companies and their clients. By integrating Waiver of Restoration Premium in their policies, insurance providers are not only offering a reliable safety net to their customers but also winning their clients’ confidence in their ability to safeguard businesses and assets during challenging times.


The Waiver of Restoration Premium is a clause in an insurance contract that allows policyholders to reinstate their initial policy limits in case of a loss without having to pay an additional premium. Here are three real-world examples:

Example 1:A retail store has a property insurance policy with a Waiver of Restoration Premium clause. If a fire occurs, resulting in damage to the store’s inventory and building, the store can reinstate its policy limits after receiving the claim payout without paying an extra premium. This allows the store owner to maintain full coverage for any future incidents without bearing the burden of additional costs.

Example 2: A manufacturing company experiences a flood that causes severe damage to its machinery and internal systems. Their insurance policy included a Waiver of Restoration Premium, allowing the company to restore the original insurance coverage after receiving the claim payment. This feature ensures that the manufacturing company remains well-protected against potential subsequent losses without facing any additional premium payments.

Example 3:A homeowner with a homeowner’s insurance policy experiences a burglary and has valuable items stolen from their home. Their policy includes a Waiver of Restoration Premium clause, which allows them to reinstate the full coverage amount for their property content after receiving the insurance payout. This ensures the homeowner remains protected against future losses without having to pay extra premiums to maintain full coverage.

Frequently Asked Questions(FAQ)

What is a Waiver of Restoration Premium?

A Waiver of Restoration Premium is a provision in certain insurance policies that allows the insured to reinstate the original coverage amount without paying an additional premium, even after a loss has occurred.

In which types of insurance policies can this waiver be found?

This waiver is commonly found in property insurance policies and sometimes in life insurance policies to help policyholders maintain a consistent level of coverage.

When does the Waiver of Restoration Premium come into effect?

The Waiver of Restoration Premium comes into effect after the insured has faced a loss and received compensation from the insurance company. This provision allows the policyholder to reinstate their original coverage amount without having to pay an extra premium.

How does the Waiver of Restoration Premium benefit policyholders?

This waiver benefits policyholders by enabling them to maintain adequate coverage even after a major loss, without needing to pay extra premiums for the reinstatement of the original coverage amount. This can save policyholders money and provide peace of mind.

Is the Waiver of Restoration Premium a standard feature in all insurance policies?

No, it is not a standard feature in all insurance policies. It’s essential for policyholders to carefully review their policy documents to determine if this waiver is included or if they need to request it during the policy purchase or renewal process.

Are there any conditions or requirements for the waiver to be effective?

Requirements for the Waiver of Restoration Premium may vary between insurance companies and policies. Some carriers may require the policyholder to meet certain conditions, such as timely loss reporting and cooperation during the claims process; others may have specific deadlines for reinstating coverage.

Can the insurance company deny the Waiver of Restoration Premium?

In some cases, insurance companies may have the right to deny the waiver if the policyholder fails to comply with policy conditions or if the company deems that the risk has changed substantially since the policy was originally issued. It is crucial to review your policy documents for details.

How do I find out if my policy includes a Waiver of Restoration Premium?

Check your insurance policy documents or contact your insurance agent or company representative to determine if this waiver is included in your policy. If it is not, you can discuss adding it with your agent or company.

Is there an additional cost for having the Waiver of Restoration Premium in my policy?

Some insurance companies may charge an additional fee or premium for including this waiver in your policy, while others may provide it free of charge or as part of a package. Discuss any associated costs with your insurance agent or company when purchasing or renewing your policy.

Related Finance Terms

  • Insurance Policy Endorsement
  • Risk Management Strategy
  • Property Loss Coverage
  • Policy Reinstatement
  • Disaster Recovery Planning

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