Edgar's seven-year-old car is written off in an accident. His motor insurers indemnify him for his loss. This means they will

Indemnity in insurance refers to restoring the insured to the financial position they were in before a loss occurred, without profiting from the insurance. In the context of Edgar's situation, indemnification means that the insurers will compensate him for his loss based on the actual value of the written-off vehicle, rather than providing a new or superior vehicle.

Option A is correct because a "like for like" replacement aligns with the principle of indemnity, ensuring that Edgar receives a vehicle of similar value and condition, reflecting the market price of his seven-year-old car at the time of the accident. This ensures that he is not unjustly enriched, as he receives a vehicle comparable to the one he lost.

The other options do not align with the standard indemnity principles. A brand new vehicle would provide Edgar with an advantage over his original asset, thus breaching the indemnity principle. Repaying the premium for the unexpired portion of the policy does not address the loss of the vehicle, and settling any outstanding loan would not directly compensate for the physical loss of the car but instead resolve financial obligations tied to it.