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      Question

      What is the principle of indemnity in

      insurance? 
      A The insurer should compensate the insured for the actual financial loss suffered due to an unforeseen event or peril Correct Answer Incorrect Answer
      B The insurer should compensate the insured for any loss suffered, regardless of the cause Correct Answer Incorrect Answer
      C The insurer should compensate the insured for any potential loss, regardless of whether it occurs or not Correct Answer Incorrect Answer
      D The insurer should compensate the insured for any loss suffered, but only up to a certain limit Correct Answer Incorrect Answer

      Solution

      The insurer should compensate the insured for the actual financial loss suffered due to an unforeseen event or peril Explanation: The principle of indemnity requires the insurer to compensate the insured for the actual financial loss suffered due to an unforeseen event or peril, up to the amount of the sum insured.

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