The concept of indemnity is based on the key principle that policyholders should be prevented from

A. Insuring existing losses

B. Making false insurance claims

C. Paying excessively for insurance cover

D. Profiting from insurance

Answer: Option D

Solution(By Examveda Team)

The concept of indemnity is based on the key principle that policyholders should be prevented from profiting from insurance. One of the basic tenets of insurance, that the insured should not profit from a loss or damage but should be returned (as near as possible) to the same financial position that existed before the loss or damage occurred.