Reimbursement vs Reinstatement
Reimbursement in a car insurance claim will be the payment of an amount of money to the insured person to make good the loss or damage suffered to the insured object, namely the car. When a car was damaged in an accident the insurance company has to decide if it will repair the car or write it off as a total loss. The decision to write off is taken where the cost of repair exceeds the insured value of the car. The insured is reimbursed from the insurance pool to which all car insurance clients have contributed.
Reinstatement will take place should the insurance company decide to repair, reinstate, or make good the damaged car. The choice always lies with the insurance company as to whether the car will be written off and the insured reimbursed or whether the car will be reinstated. The insured party cannot demand either of the two options specifically.
Reinstatement of the sum insured or reinstatement of cover after a loss will be applicable where claims have depleted the limit of insurance agreed on in the contract. If the insurance company is prepared to reinstate the sum insured the insured party will be asked to pay an additional or reinstatement premium.