Any insurance designed to compensate a policyholder for a loss suffered, by the payment of money, repair, replacement, or reinstatement. In every case the policyholder is entitled to be restored to the same financial position as that immediately before the loss-causing event occurred. There must be no element of profit to the policyholder nor any element of loss. Most - but not all - insurance policies are indemnity contracts. For example, personal accident and life-assurance policies are not contracts of indemnity as it is impossible to calculate the value of a lost life or limb (as the value of a car or other property can be calculated).
Subjects: Financial Institutions and Services.