What does Restoration of Limits Provision mean? Read on to discover the definition & meaning of the term Restoration of Limits Provision - to help you better understand the language used in insurance policies.
Restoration of Limits Provision
When a scheduled item has been lost or destroyed, there is nothing left to insure. After insured property is destroyed, and an insurer indemnifies the insured, what happens to the insurance? Many property policies include a restoration of limits provision that answers this question. Three approaches are common. Some policies state that the limits are restored after a loss is paid, and some state exactly the opposite that paying a loss does not reduce the policy limits. With others, however, after the insurer pays a total loss, coverage ceases and the insurer returns any unearned premium.
More Insurance Terms And Definitions
The Merriam-Webster Dictionary defines insurance as:
b: Coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.
c: The sum for which something is insured.
We hope the you have a better understanding of the meaning of Restoration of Limits Provision. If you are looking for the meanings of other important insurance terms and their definitions, just click on the letter below to find the words & concepts you are looking for: