The features of the principles of indemnity.
The word indemnity denotes security or protection against loss. The effect of indemnity to insurance protects the insured from losses. The principles of indemnity states that the insurer undertakes to indemnify the insured or policy-holders for the losses caused due to occurrence of certain accidents. by receiving compensation form the insurer, the policy holder becomes neither better nor worse but remains in the same position as before. This principle has got a wider application to property insurance and insurance of liabilities. This principle is not applied to life insurance where it becomes difficult to measure financial loss. There are various methods of providing indemnity to the insured.
Image Source: i.ytimg.com/vi/pwIl59nyHsY/maxresdefault.jpg
These are:
- In the form of cash.
- In the form of replacement.
- In the form of repair.
- In the form of reinstatement.