Indemnity
Putting the insured back where they were — no better.
Definition
The governing principle of non-life insurance: the payment restores the insured's financial position, it does not improve it. In cargo insurance the measure is usually agreed in advance by an agreed-value basis, so the sum insured stated on the certificate is what is paid for a total loss rather than a value argued after the event.
Why it decides money
The agreed-value basis is what makes cargo claims quick. It also means an understated value is an understated claim, with no opportunity to revisit it once a loss has happened.
Related terms
- Sum insured
- The agreed figure the cover is written for, and the ceiling on any payment.
- CIF plus 10%
- The customary basis of valuation: cost, insurance, freight and a tenth on top.
- Under-insurance
- Declare half the value and a partial loss pays half.
More in value and premium
InsuranceScanner is an insurance intermediary, not an insurer — see the Terms for our role. Nothing here is a personal recommendation that a particular cover, sum insured or deductible is suitable for you. Where anything on this page conflicts with the certificate, policy schedule or wording issued by an insurer, that document governs.