# Indemnity

_Glossary_

Canonical: https://www.claimspages.com/learn/glossary/indemnity/

The principle of restoring the insured to the same financial position as before the loss, without profit.

Indemnity is the foundational principle that insurance pays for actual economic loss, not a windfall. Property policies pay repair or replacement costs subject to limits; life insurance is a notable exception paying a fixed benefit.

Subrogation supports indemnity by preventing double recovery from tortfeasor and insurer.



After theft of a laptop, the insurer pays the lesser of replacement cost or limit so the insured is made whole but cannot keep the laptop and cash profit.