All About Claims, FAQS on Insurance, General, Insurance in Nigeria, Insurance Terms and Terminologies

Indemnity

This principle ensures that the insured or policyholder is brought back to his pre-loss position. This means that the person will receive no more and no less than the value of the loss. It prevents the policy holder from making a profit out of insurance. This is why it is usual in property insurance for deduction to be made for wear and tear from claims

The principle provides that insurers could indemnity in any of the following ways:

  • Payment of cash sum. This is the most common way and it involves payment of a cash sum for the value of the loss
  • Repair: The insurer may repair the property. For example, insurance company could repair a vehicle which was involved in an accident at a vehicle repair workshop
  • Replacement. The item could be replaced with another one
  • Reinstatement.

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