indemnity principles

Indemnity principles in insurance mean that the policy aims to restore the insured to the same financial position they were in before a loss, without allowing them to profit from it. The insurer compensates for actual damages or loss incurred, rather than providing extra money. This ensures fairness by preventing overcompensation and encourages responsible behavior. Essentially, insurance acts as a safety net to cover true losses, maintaining the insured’s financial balance without enabling gain beyond their original loss.