The principle of insurance that restores the insured to the position he occupied immediately before the loss occurred is called

The principle of insurance that restores the insured to the position he occupied immediately before the loss occurred is known as indemnity. In other words, indemnity is a principle of insurance which ensures that the insured person receives compensation equal to the amount of the loss suffered by him/her, and nothing more. The purpose of this principle is to ensure that the insured person is not put in a better position than he was in before the loss occurred, nor is he put in a worse position. Instead, the insurer provides compensation to the insured which is sufficient to restore the insured to the financial position he was in immediately before the loss occurred.