Which term refers to the size of the payment received on a claim?

Indemnity refers to the compensation that an insured party receives after a loss occurs, reflecting the insurance principle of restoring the insured to their pre-loss financial condition. In essence, indemnity is the amount paid out by the insurance company to cover the loss or damage that has been claimed, thus protecting the insured from financial hardship following an unforeseen event.

The term's significance lies in its aim to prevent the insured from making a profit from their insurance policy while ensuring they do not suffer a loss greater than what the policy will cover. The concept is fundamental in property and casualty insurance, as it reinforces the goal of insurance: to provide financial protection against losses.

The other terms relate to different aspects of insurance. The deductible represents the amount the policyholder is responsible for paying out of pocket before the insurance kicks in. The premium is the amount paid for the insurance coverage itself, often calculated on a regular basis (monthly, yearly). Underwriting is the process that insurance companies use to assess risks and determine the terms of coverage, including eligibility and pricing. Understanding these distinctions reinforces why indemnity is the correct term related specifically to the monetary payment received on a claim.