A STORY OF INDEMNITY

The insurance companies themselves have used the example of a man who knocks over someone’s beer in a crowded pub to illustrate indemnity. Suppose I knocked over someone’s glass of beer, from which he had already taken a generous swig, in a pub. I would of course apologize, and insist on buying him another pint. In other words I would more than make up for the damage, and would restore him to a better position than he was in before. The insurance company would not be generous in this way. It would make the most careful inquiries as to how much had been drunk already, and would replace the exact quantity spilled. It is no function of the insurers to pay out more from the pool than is necessary; to do so would offend against the principle of indemnity.