Property and Casualty Insurance Practice Exam

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Study for the Property and Casualty Insurance Exam. Utilize flashcards and multiple-choice questions with thorough explanations. Prepare with confidence and excel in your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

In the context of insurance, what does indemnify mean?

To repair a loss without compensation
To provide compensation for a loss incurred
To charge a fee for a service
To negotiate a settlement

The correct answer is: To provide compensation for a loss incurred

Indemnify refers to the process of providing compensation for a loss incurred, which aligns with the selected answer. In insurance, indemnification plays a critical role as it ensures that the policyholder is restored to the financial position they were in before the loss occurred, without allowing them to profit from the situation. This principle is foundational in property and casualty insurance, as it upholds the insurer’s responsibility to cover specific financial losses as outlined in the policy. The other options do not capture the intention behind indemnification. Repairing a loss without compensation misses the fundamental purpose of indemnity, as it implies no financial restitution is given. Charging a fee for a service does not relate to the concept of indemnity; rather, it pertains to the business typical in service transactions. Negotiating a settlement, while relevant in the context of insurance claims, does not encapsulate the essence of indemnification, which is specifically about compensating for losses rather than simply coming to an agreement about a claim.