What does Indemnification aim to achieve for the insured?

Indemnification aims to restore the insured to their financial position prior to a loss, which aligns directly with the principle of insurance. The fundamental purpose of insurance is to provide financial protection and ensure that individuals do not suffer a financial setback as a result of unforeseen events, such as accidents or damages. When a loss occurs, indemnification compensates the insured for their actual loss, ensuring they are "made whole" again, though not in a way that allows them to profit from the situation.

This concept of indemnification underscores that the insured should be returned to their original financial state before the incident occurred, helping to alleviate the financial burden that can result from such losses. In this context, the focus is on balancing the scales after a loss rather than increasing wealth or altering policy terms. Thus, the aim of indemnification is inherently tied to restoring financial stability and security for the insured.