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Reinstatement

This is a method of insuring property on a 'new' for 'old' basis.  In the event of a loss where propoerty is insured under these conditions, settlement would be based on the cost of replacing the property or restoring the damage in the new materials without any deducation for depreciation.

 

Extra Cost of Reinstatement

Provides protection for additional cost to comply with regulations of Statutory Authorities following a loss e.g. your previous premises may have had wooden staircase whereas current regulations require brick, thus your initial sum insured should allow for reinstatement in brick.  Or you may be required to install an automatic sprinkler system.