Paper 2 · Insurance
What does the principle of indemnity mean?
AThe insured must always suffer at least part of any loss personally, even when the policy is fully paid up
BThe insurer may refuse to pay out any claim that it personally considers to be unreasonably large
COnly life assurance policies, and not fire, motor or marine policies, are subject to the principle of indemnity
DThe insured is restored to the same financial position as before the loss, without making a profit
Explanation: Indemnity restores the insured to their former position, without making a profit from the loss.
Derived from ZIMSEC Commerce 7103/02 Paper 2, November 2004, Q6
