What is the purpose of a clause designed to reinforce the Principle of Indemnity?

The principle of indemnity in insurance is centered around the idea that an insured should not profit from a loss but should be restored to the financial position they were in before the loss occurred. A clause designed to reinforce this principle is specifically aimed at preventing the insured from claiming more than what they have lost. By ensuring that claims cannot exceed the actual financial loss incurred, this clause maintains the integrity of the indemnity principle.

Increasing coverage limits, ensuring complete refunds, or allowing for policy reviews do not directly relate to the concept of indemnifying the insured for their loss without allowing for gain. The main goal is to ensure that the compensation received reflects only the actual loss, thus adhering to the principle of indemnity.