Which of the following best describes the process of indemnification in insurance?

Indemnification in insurance refers specifically to the principle of compensating a policyholder for losses covered by their insurance policy. This process ensures that the insured is restored to the financial position they were in prior to the loss, as closely as possible, without allowing them to profit from their loss.

When a claim is filed, the insurer assesses the damages and provides reimbursement according to the coverage outlined in the policy. This means that if the insured has a valid claim and it falls within the parameters of their coverage limits, they will receive compensation for the damage or loss experienced. This concept is foundational in the insurance industry, ensuring fairness and equity in how losses are managed and settled.

The other options do not accurately represent the concept of indemnification. Restitution for lost revenue focuses only on income rather than losses due to damages, while the adjustment of premiums based on claims relates to how insurers formulate pricing rather than the process of reimbursing losses. Similarly, limits on claims per incident refer to the maximum payout an insurer will provide, which again does not capture the essence of indemnification itself.