What is the maximum amount Clare can claim from her first fire insurance policy if damage costs £60,000 to repair?

To determine the maximum amount Clare can claim from her fire insurance policy, it's essential to understand the principle of indemnity, which is a fundamental part of insurance. Indemnity means that an insurance policy is designed to restore the insured to the financial position they were in prior to the loss, without allowing for profit or gain from the insurance payout.

From the information provided, it appears that Clare's first fire insurance policy has a coverage limit of £20,000. This means that irrespective of the total repair costs, which amount to £60,000, the maximum payout that Clare can receive under her fire insurance policy is capped at £20,000. Insurance policies often have limits based on the type of damage, the sums insured, and the terms of the contract, and these amounts are agreed upon when the policy is taken out.

In this scenario, since the coverage limit is £20,000, that is the maximum amount Clare can claim, regardless of the actual damage costs. It reflects the contractual obligation of the insurer, as stated in the policy, to limit the payout to the specified amount. Therefore, Clare can only claim £20,000 from her insurance, which aligns with the principles of indemnity and coverage limitations in insurance contracts.