Effect of insurers opting to reinstate

Property insurers generally reserve to themselves in the policy the right to reinstate buildings as an alternative to paying the assured an indemnity based upon repairing costs. If they elect to reinstate, the insurance contract is converted into a building contract. In Domsalla v Dyason [2007] EWHC 1174 (TCC) the assured, acting on the insurers’ instructions and acting as their agent, entered into a construction contract with a builder. The issue was whether the assured was a party to the agreement in his own right: if he was, it became possible to argue that various terms of the agreement were not binding on him by reason of his status as a consumer.