What condition allows for the restoration of policy limits after a total loss payout?

The correct choice reflecting the condition that allows for the restoration of policy limits after a total loss payout is that the loss does not reduce the limits. This means if a policyholder experiences a total loss, the insurance policy can specify that the coverage limit remains intact even after the payout for the total loss.

In many insurance policies, particularly those that feature replacement cost coverage or are designed to address full-value recovery, the objective is to ensure the insured has access to the same coverage limits after a claim, thus maintaining their financial protection going forward.

Other options do not capture the specific mechanism that directly allows for the restoration of policy limits post-total loss. For example, canceling the policy does not imply restoration, and an additional premium does not automatically apply to restore limits but rather may pertain to purchasing additional coverage. Lastly, the absence of restrictions on claims does not guarantee that limits will be restored, as the specifics of policy terms dictate how limits are managed post-loss.