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What is Reinstatement Basis of Cover ?

The most common method of insuring commercial buildings is on a Reinstatement Basis.

Cover is determined by the cost of repair or reconstruction at the time of loss as opposed to at the start of the insurance period.

This will most likely have increased during the policy period as a result of construction cost inflation.

The selected Sum Insured therefore must include an allowance for this inflation, not only during the period of insurance but also during the rebuilding period.

A loss may not occur until very well into the policy period, possibly almost at expiry so it is vital that the selected Sum Insured allows for the potential of an extended period of reinstatement
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