The Principles of Indemnity in Insurance
- What is Indemnity?: The principle that insurance is designed to restore the policyholder to the same financial position they were in before the loss, without profiting from the claim.
- How Indemnity Works:
- If your property is damaged or destroyed, your insurer will pay for repairs or replacements up to the policy’s coverage limit.
- Depreciation: Some insurance policies factor in depreciation, meaning older items may not be reimbursed for their full replacement value.
- Examples of Indemnity in Action: If your car is totaled in an accident, the insurer will pay for the replacement value or the market value, depending on the policy type.
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