Florida Insurance Licensing Practice Exam

The goal of insurance is to restore the insured to the same economic position as before the covered loss, this is the principle of:

1. Indemnity

2. Interest

3. Adhesion

4. Wagering

The correct answer is: Indemnity

The principle of indemnity is a key concept in insurance which aims to restore the insured to the same economic position as they were in before the covered loss occurred. This means that an insured should not gain financially from an insurance claim, but also should not suffer a financial loss. Options B, C, and D are incorrect because they do not accurately reflect the purpose of insurance. Interest refers to the additional amount paid to borrow money, not the restoration of one's economic position. Adhesion refers to a one-sided agreement where one party has more power than the other, which is not the case in insurance. Wagering, also known as gambling, is not a principle that aligns with the purpose of insurance.