Indemnity in insurance aims to restore the insured to their pre-loss financial position.

• A. Not true
• B. Partially true
• C. Only for health claims
• D. True

Answer: (D)

Indemnity is the principle that insurance payments should bring the insured back to the financial position they had before the loss, by reimbursing covered losses up to the policy limits and after any deductibles or coinsurance. This means the goal is to restore—not enrich—the insured financially following a claim.

This is why the statement is true in the common use of insurance, especially for property and liability coverages. There are special exceptions—such as valued policies, where payout is the agreed value, or certain life-insurance contexts—that don’t follow the exact restoration of pre-loss finances, but they are not the norm for standard indemnity contracts. The idea isn’t confined to health claims, which further supports why the broad answer “true” best fits.