Explain the principle of indemnity and principle of utmost good faith.

Explanation

Indemnity means security or compensation against loss or damage. The principle of indemnity is such principle of insurance stating that an insured may not be compensated by the insurance company in an amount exceeding the insured's economic loss.



Principle of Utmost Good Faith. The principle of Utmost Good Faith is also known as Uberrimae Fides. It means that both the policyholder and the insurer need to disclose all material and relevant information to each other before commencement of the contract.