Under a household insurance policy, the reinstatement basis of cover is more commonly known as

The reinstatement basis of cover under a household insurance policy is commonly referred to as "new for old cover." This means that in the event of a loss, the insurer will replace the damaged or lost items with new ones of similar quality, regardless of the age or condition of the original items. This approach ensures that the policyholder does not suffer a loss based on depreciation, as they receive a replacement that is equivalent to the current market value.

This type of cover is particularly advantageous for items such as household goods, appliances, or personal belongings, where the cost of replacement is often higher than the item’s original purchase price due to factors like inflation or technological advancements. Therefore, the reinstatement basis provides peace of mind that the insured can replace their items without incurring additional costs beyond what was originally paid.

In contrast, agreed value cover refers to a pre-determined amount indemnified at the time of the policy inception, first loss cover provides coverage only up to a specified limit without co-insurance, and underinsurance cover deals with the penalties and adjustments when the insured amount is below the actual value of possessions.