General insurance The logic behind insurance idemnity

[Augusta]

I'm just a bit perplexed with the insurance Principle of. Idemnity that only compensate an insured to his or her original position. Yes I know that insurance company is a profit making business but restoring an insured just to it's former position before an incident happened seems not to be fair.

Like they are always only willing to compensate a person to an average position even when the premium can buy a new of that thing that was damaged and they need to replace.

I think this Principle isn't fair on the insured. It like one is getting too little of the premium paid to the insurance company.

What do you think about this Principle. Do you think the insurance company are being rational with instituting this Principle

 

[btaliat]

I do think insurance policy is a scam. First when they want to enter into agreement with the insured person, they will make sure the agreement will favour them by entering into the policies with low chance of happening. Besides, if the event finally occurs, they will compensate to the original stage and not to make it better.

 

[Sotherefore]

Well this is definitely not the best option that is why a lot of people who want to enter into an insurance agreement with a particular organisation need to know and understand all the things that the insurance company covers because this will help them to make the right decision whether to go into it or not to avoid regret in the future.

 

[Nite]

This principle of insurance indemnity is to protect insurance companies by eliminating moral hazard, and they can keep their business on track. No one will as tempted to commit any fraud if there was no other way to profit from the claim, as they would get back only what they've lost.

 

[Mandy96]

This is very true considering the fact that nothing is fair in this world. I have always told people interested in insurance not to get overjoyed by it because they should have it at the back of their minds that it is also a business organization trying to find any means possible in the line of their business to earn profits