n NISM Certifications
X NISM Series X
Medium

Which statements are true about the Principle of Indemnity?

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    The insured agrees to pay premiums

  2. B

    The insurer compensates for loss incurred

  3. C

    Compensation depends on loss extent

  4. All of the above

    Correct answer

Why this is the answer

The principle states that insurance restores the insured’s financial position to pre-loss levels, with the insurer liable to pay as per loss extent.

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