Waiver of Restoration Premium: 2025 Guide for Australian Borrowers

The term ‘waiver of restoration premium’ might sound like insurance jargon, but in 2025, it’s a crucial consideration for many Australians managing asset finance or business insurance. With ongoing changes to commercial lending and insurance regulations, understanding how this waiver works—and when it can save you money—could be a game-changer for your bottom line.

What Is a Waiver of Restoration Premium?

In insurance and asset finance, a ‘restoration premium’ is typically the extra premium required to reinstate a policy’s original sum insured after a claim has been paid. For example, if a business claims $200,000 on a $1 million policy, the sum insured drops to $800,000—unless a restoration premium is paid to top it back up.

A ‘waiver of restoration premium’ means the insurer agrees to reinstate the full insured amount after a claim, without charging the extra premium. This clause is especially relevant in asset finance agreements, commercial property insurance, and some forms of business interruption cover.

2025 Policy Changes: What’s New?

This year, the Australian Prudential Regulation Authority (APRA) has implemented new standards that encourage more transparent terms in asset finance and insurance contracts. As a result:

• More lenders and insurers are explicitly stating whether restoration premiums are waived or charged.
• Some commercial insurance products now offer automatic waiver of restoration premium, particularly for SMEs in high-growth sectors like renewables and tech.
• Large lenders are updating loan documentation to clarify if the asset’s insured value will be fully restored after a loss—without extra cost to the borrower.

For example, a recent update from a major Australian bank now guarantees a waiver of restoration premium for solar asset finance clients, reflecting the government’s push for clean energy adoption and streamlined insurance processes.

How Does a Waiver Benefit Borrowers and Businesses?

The practical benefits of a waiver of restoration premium are significant, especially for businesses managing large assets or multiple locations. Here’s why:

• Cash Flow Certainty: No unexpected out-of-pocket expenses to reinstate your cover after a claim.
• Full Ongoing Protection: Your assets remain fully insured, reducing risk exposure to subsequent losses.
• Streamlined Claims Process: No need for extra paperwork or negotiations to restore your coverage.

For instance, a logistics company that suffered a warehouse fire in early 2025 was able to claim under its commercial property policy and have the sum insured restored instantly—because its policy included a waiver of restoration premium. This meant the business could continue operations without the stress of underinsurance or additional premium costs.

What Should You Watch for in 2025?

While many lenders and insurers are moving towards waiving restoration premiums, not all policies offer this benefit. Here’s what to check:

• Review your policy or loan agreement for any mention of restoration premium or ‘automatic reinstatement.’
• Compare offers from different lenders or insurers—some may charge extra for this feature, while others include it as standard.
• For asset finance, ask your broker or lender if your cover will automatically restore the insured value after a claim, and if any extra premiums apply.

With APRA’s 2025 emphasis on disclosure and transparency, you have more power than ever to negotiate terms that suit your business’s risk profile and cash flow needs.

Waiver of Restoration Premium: The Bottom Line

As asset values and insurance costs continue to climb in Australia, understanding the nuances of your policy—like whether a restoration premium is waived—can have a direct impact on your financial resilience. With regulatory changes and competitive new offerings in 2025, now is the time to review your insurance and finance contracts, and ensure you’re not paying more than you need to for ongoing protection.