An indemnity insurance policy prevents an insured from which of the following?

An indemnity insurance policy is designed to compensate the insured for a loss incurred, ensuring that they are restored to their financial position prior to the loss, but not in a way that allows them to profit from that loss. This principle is known as the "indemnity principle," which is fundamental to most insurance contracts.

In the context of indemnity insurance, if an insured were permitted to profit from an insured loss, it would fundamentally undermine the purpose of the insurance policy. The insured should not receive more than the actual financial loss incurred, as this could encourage moral hazard where the insured might take greater risks or create situations that lead to a claim, knowing they could financially benefit from it.

Therefore, the correct answer highlights that an indemnity insurance policy prevents the insured from profiting from an insured loss, as the focus is on compensation for actual losses rather than generating profit from claims. Understanding this principle is crucial for grasping how risk management and insurance operate effectively in practice.