What does Principle of Indemnity mean? Read on to discover the definition & meaning of the term Principle of Indemnity - to help you better understand the language used in insurance policies.
Principle of Indemnity
The principle of indemnity is a defining aspect of insurance, and it states that an insurance policy shall not provide compensation to the policyholder that exceeds their economic loss. This limits the benefit to an amount that restores the policyholder to the same financial state they were in prior to the loss.
We hope the you have a better understanding of the meaning of Principle of Indemnity.