Indemnity means the payout aims to put you back in the position you were in just before the insured loss, subject to limits and deductibles. You should not profit from a claim. Life policies and some fixed benefit products work differently because you cannot put a market price on a life in the same way as on a burnt warehouse.
Key takeaways
- Property and liability covers are built on indemnity thinking.
- Betterment (upgrades beyond the pre loss state) is often excluded or charged to you.
- Proof of value and ownership matters when the insurer calculates the indemnity amount.
- Agreed value policies set the figure in advance; pure indemnity policies assess after the loss.