Where an insurance policy included reinstatement value conditions and the insured had taken immediate steps to comply with the reinstatement conditions, the insured could rely on the clause as long as the insured was genuinely desirous of restarting the business but was unable to do so because of the insurer’s unjustifiable decision not to indemnify under the policy.

The proviso to the reinstatement value conditions that they are ‘without force or effect if the insured is unable or unwilling to replace or reinstate the property on the same or another site’ does not exclude an inability to replace or reinstate if money was not available because the insurer withheld the indemnity payment obligation.

The court granted judgment for the insured of the replacement value fixed by the experts in evidence. The court also awarded interest on the amount at the legal rate of 15.5% from September 2011 when the costs of reinstatement had been established.

The case is Watson v Renasa Insurance Company Limited.