The principle that insurance should restore the policyholder to the same financial position they were in before the loss occurred, no more and no less. Indemnity prevents policyholders from profiting from an insurance claim. This principle is fundamental to property and casualty insurance and influences how claims are calculated and settled.
Understanding indemnity is important for Canadian insurance consumers because it directly affects how your coverage works and what you can expect when you need to use your insurance. This is a foundational insurance concept that applies across multiple types of coverage and is worth understanding regardless of what insurance you carry.
If you have questions about how indemnity applies to your specific insurance needs, speaking with a licensed insurance broker can help clarify your options and ensure you have the right level of protection.
The amount it would cost to replace damaged or destroyed property with new property of similar kind and quality, without deducting for depreciation. Replacement cost coverage is more expensive than actual cash value coverage but provides better protection because you receive enough money to buy a brand-new replacement. It is commonly available for home and contents insurance.
The legal right of an insurance company, after paying a claim, to pursue recovery from a third party who is responsible for the loss. For example, if your parked car is damaged by another driver, your insurer may pay your claim and then seek reimbursement from the at-fault driver's insurer. Subrogation helps keep insurance costs down for all policyholders.
A licensed insurance broker can explain how indemnity applies to your specific situation and help you find the right coverage.
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