Question

Which principle is accurately described with the statement "insured are entitled to recover an amount NOT greater than the amount of their loss"?

a) Subrogation
b) Utmost good faith
c) Indemnity
d) Contribution

Answer 1

The principle accurately described with the statement "insured are entitled to recover an amount NOT greater than the amount of their loss" is Indemnity.

Step-by-step explanation:

The principle accurately described with the statement "insured are entitled to recover an amount NOT greater than the amount of their loss" is Indemnity.

Indemnity is a principle in insurance contracts that states that the insured should be compensated to the extent of their actual loss without making a profit from the insurance claim. In other words, the insured can only recover the amount of money that they have lost due to a covered peril or event.

For example, if a person's car is damaged in an accident and the repair cost is $4,000, the insurance company will only indemnify the insured for that amount. They will not pay an amount greater than the actual repair cost to prevent the insured from making a profit from the claim.