In the context of insurance, what does "indemnify" mean?

Indemnify in the context of insurance refers to the obligation of an insurer to compensate the insured for losses suffered, restoring the insured to the financial position they were in before the loss occurred. This concept is central to the principles of insurance, ensuring that policyholders are made whole after experiencing a loss due to covered events.

When a loss occurs—such as from a fire, theft, or accident—the insurer evaluates the claim and, upon validation, provides compensation to cover the damages or losses according to the terms of the insurance policy. This avoids the financial burden on the insured, fulfilling the insurer's promise of protection.

The other choices presented do not align with the concept of indemnification. Denying a claim goes against the principle of indemnification, as it does not provide compensation for losses. Transferring rights pertains more to the legal aspects of policy ownership rather than the principle of compensating for losses. Charging a premium refers to the payments made for insurance coverage, which is a different aspect of the insurance process and not related to indemnification itself.