In what scenario does indemnity insurance not provide coverage?

Indemnity insurance is designed to restore the insured to their pre-loss financial position, meaning it covers losses that occur due to certain events or claims. The principle of indemnity asserts that the insured should not profit from a loss; they should only recover what they have actually lost.

In the scenario where the insured seeks profit, it contradicts the fundamental purpose of indemnity insurance. The coverage does not extend to situations where an insured attempts to gain more than the actual loss incurred. This principle is central to ensuring that insurance remains a risk-sharing mechanism rather than a profit-making tool.

Other scenarios, such as incurring no loss, making multiple claims, or exceeding policy limits, may still fall under the coverage stipulations of the policy, albeit with certain limitations or conditions. However, any attempt to profit from a loss outright disqualifies the claim from coverage under indemnity insurance.