If an insured suffers a loss covered under her insurance policy, the measure of indemnity will ensure that she will be

The measure of indemnity in insurance is designed to restore the insured to the same financial position they were in before the loss occurred. This principle is fundamental to most insurance policies, which means that the compensation provided should reflect the actual loss suffered and not allow the insured to profit from the situation.

When an insured files a claim and receives an indemnity payment, the goal is to cover the financial impact of the loss—not to provide more or less than what was originally lost. This principle aims to prevent any form of unjust enrichment for the insured. Therefore, if the insured is adequately compensated, their financial situation after the claim should mirror what it was prior to the loss, assuming all other factors remain constant.

In contrast, allowing the insured to profit from a loss or leaving them in a worse financial position would violate the ethical standards and regulations governing insurance practices. Furthermore, simply providing replacement items does not take into account the financial aspect of the loss, as it may not reflect the actual value of the lost items or the financial condition of the insured before the incident. Thus, ensuring an insured is placed in the same financial position as they were before the loss aligns with the indemnity principle central to insurance.