Indemnity

The whole point of insurance: put you back where you were before the loss — no better, no worse. No getting rich off a claim.

Indemnity is the core principle of insurance: to restore you to the financial position you were in just before a loss — no better, no worse.

It’s the reason a claim pays to repair or replace what you lost rather than handing you a windfall, and why concepts like actual cash value, deductibles, and “other insurance” clauses exist — they all keep a payout tied to your actual loss. You can’t profit from insurance; you can only be made whole.

A few products are exceptions by design — life insurance and “valued” policies pay a set amount — but for property and liability coverage, indemnity is the rule everything else is built around.

This is a friendly general explanation, not legal or policy language. Exact coverage depends on your policy, carrier, and state. 🤝

Written and reviewed by the We Insure Things team — licensed independent insurance agents. Last reviewed July 23, 2026. Questions? Ask a licensed agent.