Insurance term
Indemnity
Restoring the pre-loss position
Definition
The principle that an insurance payout returns the insured to the financial position held immediately before the loss — no better and no worse.
In more detail
Indemnity settlements deduct for wear and depreciation. A 'new for old' or replacement-cost basis is a departure from strict indemnity and is priced accordingly.
Glossary entries are general explanations, not advice. Where a term appears in a contract or policy, the definition in that document governs.