Which of the following statements best reflects the concept behind the rule of indemnity?
A) If a large number of people are exposed to the same risk, a predictable number of losses will occur during a given period of time.
B) If a written contract exists between the insured and an insurance company, the insured is entitled to receive the maximum amount stated in the contract in the event of a loss.
C) If an insurance company's premiums generate excess funds, these excess funds must be returned to the policyholders in the form of dividends or reductions in future premiums.
D) An insured person cannot collect more than the actual loss from an insurable risk.

Question

Quizplus · Accepted Answer

The rule of indemnity states that individuals cannot gain from risk management. They can only minimize their losses.

Which of the Following Statements Best Reflects the Concept Behind