CAR INSURANCE - Reimbursement And Reinstatement

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Reimbursement is for a write-off and reinstatement for repair

Monday, 17 May 2010 17:20

When a car is involved in an accident, your car insurance provider will have to determine whether to repair the damages or write-off the vehicle. Normally if the cost to repair the vehicle exceeds the cost to replace it, the insurer will consider it a write-off. In such an event, the automobile insurer will pay you, the insured, a reimbursement fee. This is an amount to make good on the damages or loss suffered; that is, the insurer will pay out the value of the vehicle at the time of the loss.

Should an insurer decide that the vehicle is worth repairing, they will issue a reinstatement fee, to make good on the damaged car. The decision whether to pay a reimbursement fee or a reinstatement fee is up to the insurer and not you, the insured. There are two types of reinstatement: reinstatement of the sum insured and the reinstatement of claims settlement.

A reinstatement of the sum insured is a payment to the insured to the value of the damages (and not the car), which will allow the insured to restore the value of the vehicle. The reinstatement of claims settlement refers to the insurer restoring the property itself instead of making a payment to the insured. This means that the insured organises for the vehicle to get fixed instead of paying out the amount of damages.

It is the right of the insurer to not only determine whether to pay out a reimbursement fee or reinstatement fee, but also which type of reinstatement to opt for.

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