Florida Insurance Claims Adjuster License Practice Exam

Why does the principle of indemnity argue against duplicate recovery?

1. To promote legal disputes

2. To prevent financial loss of the insurer

3. To ensure fair compensation

4. To prevent recovery for the same loss more than once

The correct answer is: To prevent recovery for the same loss more than once

The principle of indemnity is a fundamental concept in insurance that states the purpose of insurance is to restore the insured to the same financial position they were in before the loss occurred. This is achieved by compensating the insured for the actual amount of their loss, rather than providing them with a windfall or profit. This principle argues against duplicate recovery because it would result in the insured receiving more than the actual amount of their loss, which goes against the purpose of insurance. Therefore, options A, B, and C are incorrect as they do not align with the principle of indemnity and would result in unfair compensation.