Reviewed by Stefan Tirschler
Updated May 30, 2023
re·in·state·ment | ˌrē-ən-ˈstāt-mənt
Definition: Resuming the active status of an insurance policy that had previously lapsed.
Mary was happy about the reinstatement of her policy after she addressed the underwriter’s concerns.
When you buy a home insurance policy, most typically the policy will be active for a period of one year. Sometimes, however, something happens during that year that causes the policy’s coverage to stop.
If a policy’s coverage stops in the middle of the policy term, we would say that the policy’s coverage was cancelled. If the coverage resumes later, the resumption is known as reinstatement.
Insurance coverage can be cancelled in the middle of the policy term for several reasons:
Non-payment of premiums. If an insurance customer doesn’t pay their insurance premiums, eventually their insurance provider will cancel their policy. Some insurers may offer customers a chance to reinstate the policy if they catch up on their missed payments.
Material change in risk. A “material change in risk” means a significant change to the insured home, one that’s large enough for the insurance company to revaluate whether or not they wish to continue coverage. For example, if you suddenly decide to open a home-based fireworks store or you change the occupancy of your home, your home insurer may cancel your coverage due to the increased risk.
Too many claims. If a customer makes too many claims in too short a time, their insurer may cancel coverage.
These are only examples, and not all would be candidates for reinstatement. Often, an insurance company would issue an entirely new policy instead of resuming the old one. The new policy might feature different premiums or more exclusions to address the issues that led to cancellation in the first place.
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About the expert: Stefan Tirschler
Stefan is responsible for underwriting leadership, market expansion, and product research and development for Square One's operations. Stefan has earned his Fellow Chartered Insurance Professional designation, and maintains a level 2 general insurance license in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stefan is also an Education Committee member and CIP/GIE instructor for the Insurance Institute of Canada.
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