General Insurance PrinciplesPregunta 161 de 474
The principle of indemnity means an insured who suffers a covered loss should be:
a.Paid more than the loss to offset the deductible
b.Paid the full policy limit on every covered claim
c.Restored to the financial position held just before the loss
d.Paid nothing until a court fixes the amount of the claim
Explicación
Indemnity restores the insured to approximately the financial position held just before the loss, making them whole without allowing a profit. Personal lines property coverages are built on this principle, which is why tools like actual cash value, deductibles, and other-insurance clauses exist. Paying the full limit for every loss, regardless of the actual amount, would violate indemnity by permitting gain.
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