Policy period: 1.1.2013 to 31.12.2013; Original sum insured: RM2,000.00.
Date of breakage: 1.6.2013; Windscreen claim: RM1,500.00; Settlement: RM1,500.00; Balance of original sum insured: RM500.00 (or reduced sum insured)
Currency of policy
Remaining policy period: 1.6.2013 to 31.12.2013; Reduced sum insured: RM500.00
In the event of a second windscreen claim of, say, RM1,500.00, during the currency of the remaining policy period, the underwriter‘s liability is limited to RM500.00 which is the reduced sum insured. It is not open to an underwriter to repudiate liability in a partial loss situation when there is an existing reduced original sum insured during the currency of this period. To repudiate liability on the purported ground that the cover has been terminated (per paragraph 3), an underwriter has committed a breach of contract under paragraph 4, subparagraph (a) of the Endorsement. Paragraph 3 and 4 are to be read separately and distinctly. In the event of a second windscreen claim occurring in the remaining policy period, underwriter’s liability is limited to RM500.00 only. Paragraph 4 (b) Reinstatement of fully utilised original sum insured (reinstated sum insured) As regards paragraph 4, sub-paragraph (b) above, this means that the reduced sum insured has been reinstated by topping-up what has been paid for in the claim back to the original sum insured. This is called the reinstated sum insured. Similarly, the word “reinstatement” is not defined in the policy. As such, its common and ordinary meaning as defined in the dictionaries shall be taken into account.
Definition of reinstatement: Oxford English Dictionary: reinstate, v. “restore to a former position or state.” Oxford Advanced Learner’s Dictionary: reinstate v. “restore to a previous important position.”
Illustration C gives a vivid picture: