Which of the following is a commonly included feature of indemnity insurance?

• A. Asset growth incentives
• B. Liability coverage enhancements
• C. Restoration of financial position after a loss
• D. Protective measures against fraud

Answer: (C)

Indemnity insurance is designed to restore an individual or entity to the financial position they were in prior to a loss. This means that when a covered loss occurs, the insurance provider compensates the policyholder for the damages or losses incurred, effectively "indemnifying" them. This principle is central to indemnity insurance and ensures that the insured does not profit from their loss, aligning with the fundamental concept of indemnity in insurance.

Understanding this, restoration of financial position after a loss is a fundamental promise of indemnity insurance. The coverage aims to provide financial restitution, helping the insured recover from the economic impact of losses such as property damage or liability claims.

The other options do not align with the core purpose of indemnity insurance. Asset growth incentives focus on increasing investment value rather than covering losses. Liability coverage enhancements might provide broader protection, but they do not specifically pertain to the core principle of indemnity. Lastly, protective measures against fraud, while essential in risk management, do not relate directly to the indemnity aspect, which is centered on compensation for losses rather than preventing them.