Your client lost jewelry during a burglary and reported the loss of a matching gold necklace, pendant, and earrings. How will the insurer settle this loss considering one earring was found?

The correct answer, which indicates that the client will receive a settlement for the value claimed less the value of one earring, is based on the principle of indemnity inherent in property insurance. Indemnity is designed to restore the insured to their pre-loss financial position without allowing them to profit from the loss.

Since the client reported the loss of a matching set comprising the necklace, pendant, and earrings, the value of the full set will typically be considered for settlement. However, because one earring was found, it still holds some value and can be subtracted from the total claim value. This approach adheres to the principle that the insured should not receive a payout for property they no longer need to replace. Therefore, the settlement would reflect the amount for the entire set minus the value of the earring that was recovered.

This ensures that the client is compensated fairly while taking into account the property that is still in their possession. In scenarios where items are lost but have been partially recovered, insurers often adjust the claim amounts to reflect the remaining items.