Insurance Terms & Concepts
The principle of indemnity means that after a covered loss the insured should be:
Answer
Restored to the same financial position as before the loss
'INDEMNITY — Legal principle that specifies an Insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position that existed before the loss.'
Source: Conn. Insurance Dept., Glossary of Insurance Terms; CA Dept. of Insurance, Small Business Guide to Commercial Insurance (Form 700), Glossary
Not the answer
- Paid the full policy limit regardless of loss
- Left better off than before the loss
- Denied any recovery
Practice this
The Texas All-Lines Adjuster exam is 150 questions with a scaled passing score of 70, which is neither the number nor the percentage correct. This test uses 70% as a yardstick. The app’s page carries a free ten-question test drawn from the same bank, marked as you go.
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