A fire insurance policy promises to reimburse the insured’s actual covered property loss, within the…
Indemnity compensates the insured for covered loss within the policy terms, without a profit from the insured event. A fixed benefit unrelated to the amount of loss would…
Choose your answer
A fire insurance policy promises to reimburse the insured’s actual covered property loss, within the policy limit. Which principle explains why the insured cannot recover more than the covered loss?
Answer and explanation
Correct answer C
Indemnity compensates the insured for covered loss within the policy terms, without a profit from the insured event.
A fixed benefit unrelated to the amount of loss would not explain a ceiling tied to actual covered loss.
Option feedback
Option A
A wager involves a stake on an event. This policy reimburses the insured for a covered loss in property.
Option B
A guarantee under section 126 of the Indian Contract Act, 1872 addresses a third person’s default. The policy described reimburses the insured’s own covered loss.
Option C
Indemnity compensates the insured for covered loss within the policy terms, without a profit from the insured event.
Option D
A fixed benefit unrelated to the amount of loss would not explain a ceiling tied to actual covered loss.
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