Why will Nigel receive only the market value of his car after the accident?

Nigel will receive only the market value of his car after the accident because that amount reflects the extent of his financial interest in the vehicle. In insurance, particularly in property insurance coverage, the principle of indemnity ensures that the insured is compensated to the extent of their loss but does not benefit from the loss. Market value represents the current worth of the car in its pre-accident condition, taking into account factors such as depreciation, age, and condition. Therefore, the insurer will pay only the market value to ensure Nigel does not profit from the accident, aligning with the principle of indemnity.

The other options do not capture the core reasoning. Statutory requirements can vary by jurisdiction and often do not dictate the specifics of compensation unless covered by legislation. The premium being unrelated to new car value might influence coverage but does not directly justify why only market value would be paid. While fault in the accident could adjust liability or claims (in some situations), it does not inherently determine the compensation amount in relation to an insured loss. Thus, the compensation is fundamentally guided by Nigel's financial interest as represented by the market value of the car.