Which of the following describes the principle of indemnity? - ProProfs Discuss
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Which of the following describes the principle of indemnity?

Which of the following describes the principle of 
indemnity?

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A. After a loss, an insured should be restored to approximately the same condition that existed before the loss.
B. Every insured will receive full compensation for all losses in all cases.
C. When property is damaged or destroyed, the insurance company must pay the full replacement cost.
D. In the case of bodily injuries, liability coverage must be available without regard to any policy exclusions.

This question is part of Chapter 2 - The Insurance Contract
Asked by Fsspc, Last updated: Aug 02, 2020

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John Smith

John Smith

Answered Oct 21, 2016

After a loss, an insured should be restored to approximately the same condition that existed before the loss.

A is correct. The principle of indemnity states that when a loss occurs, an individual should be restored to the approximate financial condition he or she was in before the loss.
 

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