What is the goal of indemnification in property insurance?

Indemnification in property insurance is designed to restore the insured to their financial position prior to the loss, which means compensating for damages or losses suffered. This principle of indemnity ensures that the policyholder does not profit from an insurance claim; instead, they are made whole again after a covered loss.

The underlying concept is to provide fairness and equity, so that after a claim is paid, the insured is in the same financial position they were before the incident occurred, without gaining additional financial benefit. This is crucial as it maintains the balance within the insurance system and encourages responsible behavior in risk management.

Other answers relate to different aspects of insurance or risk management. For instance, preventing losses is an important goal of risk management strategies but not the goal of indemnification itself. Similarly, maximizing profit for the insurer is more about the insurer's business model rather than the parameters of indemnification. Lastly, providing temporary coverage until a claim is resolved pertains to other coverage types and does not directly address the goal of indemnification.