North Carolina Adjuster Practice Exam

What principle did Randy violate after receiving a settlement check for his claim?

1. The principle of utmost good faith

2. The principle of indemnity

3. The principle of insurable interest

4. The principle of subrogation

The correct answer is: The principle of indemnity

The principle of indemnity is centered around ensuring that an insured party is compensated for their loss without profiting from their insurance claim. This principle aims to restore the insured to their pre-loss financial position rather than allowing them to benefit financially from the situation. In the context of Randy receiving a settlement check for his claim, if he received more than what he lost, he would be violating the principle of indemnity. This principle prevents insured individuals from receiving a settlement that exceeds the value of their actual loss or damage, thus avoiding scenarios where someone profits from the insurance process. Understanding this principle helps adjusters ensure that claims are handled fairly and within the guidelines of insurance ethics and contracts.