Indemnity
The principle of restoring an insured party to the same financial position they were in before a loss occurred
Detailed Explanation
Indemnity is a fundamental insurance concept that ensures you receive compensation for your actual loss but are not able to profit from insurance claims.
Practical Example
Sarah's office was damaged in a fire, resulting in $50,000 of damage. Her business property insurance provided indemnity, meaning the insurance company agreed to cover her repair costs up to the policy limits.
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