Insurance Policy – automatic reinstatement

The High Court has considered an automatic reinstatement clause in an insurance policy in Wild South Holdings Ltd v QBE Insurance (International) Ltd [NZHC] 2781.  The relevant buildings suffered damage in the September 2010, February 2011 and June 2011 earthquakes. The quakes occurred during a single insurance policy period where the sum insured was about 1/3rd of the replacement value.  The clause provided the the cover automatically reinstated upon loss unless notice was given otherwise by a party that the cover was to reinstate. It does not appear that either party ever gave notice that the cover was not to reinstate.  An extra premium was payable on reinstatement.  The Court does not conclusively decide the issue, but does appear to approve of the view that the policy cover did reinstate automatically on each event.  The effect is that the insured will be able to claim multiple times up to the sum insured each time under the insurance policy.