Insurance Term
Indemnity
The principle of restoring the insured to the same financial position they were in before the loss occurred.
Detailed Explanation
Insurance is designed to make the insured 'whole' again, not to allow them to profit from a loss. This principle prevents moral hazard, where an insured might be tempted to cause a loss to gain financially.
Premium Study Material
Don't just memorize terms.
Master the exam.
Get access to 650+ exam-like questions, detailed explanations, and specific state law-supplements for your state.
Pass Guarantee
State-Specific Content
Unlimited Practice Tests
Instant Feedback
Practice QuestionEasy
Which of the following best describes the concept of Indemnity?
Start Practicing →