What is Reinstatement Insurance?
Reinstatement insurance refers to restoring a policy or coverage that has lapsed or been canceled, often by paying a reinstatement fee or making up missed payments. The purpose of reinstatement is to provide continuity of coverage for the policyholder. Most insurers offer a grace period to policyholders before terminating the policy for late payments.
Some reasons for reinstatement insurance include the following:
- Avoiding Lapses in Coverage: If a policyholder risks losing coverage, reinstatement insurance allows them to restore their coverage without reapplying for a new policy.
- Maintaining Insurance History: By reinstating a policy, the policyholder can keep their insurance history and avoid higher premiums or reduced coverage options.
- Fulfilling Legal or Contractual Requirements: Some contracts or legal requirements may require a person or business to carry specific insurance coverage. Reinstating lapsed policy can help them fulfill their obligations and avoid legal or financial penalties.
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