General Insurance PrinciplesQuestion 195 of 716
The principle of indemnity is intended to:
a.Allow the insured to profit from a covered loss by collecting more than the loss was worth
b.Pay the insured a stated face amount regardless of actual loss, since claims settle on a valued basis
c.Permit a double recovery by stacking two separate policies written to cover the same loss
d.Restore the insured to the financial position held just before the loss, but no better
Explanation
Indemnity means making the insured whole, no more and no less. It governs property and most health insurance. Life insurance is a valued contract that pays a stated face amount because human life cannot be measured in dollars.
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Related questions on this topic
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)