What is the definition of Indemnity in the context of insurance claims?

Indemnity in the context of insurance claims refers to the concept of compensation for losses incurred by the insured, which means that the insurance policy aims to provide financial protection and restore the insured party to the same financial position they were in before the loss occurred. This principle is fundamental to insurance practices, ensuring that policyholders are reimbursed for legitimate claims, thereby preventing them from suffering economic hardship due to unforeseen events like accidents or damages.

The other options offer definitions that do not fully encapsulate the concept of indemnity. For instance, limits on the amount payable under a claim pertain to policy terms but do not define indemnity itself. Coverage against property damage is a narrower aspect of what indemnity can cover, and payments made to third-party service providers fall outside the scope of what indemnity means for the insured. Thus, the chosen answer succinctly captures the essence of indemnity as it directly relates to compensating the insured for their losses.