The promise that the insurance company will restore the insured to prior position is known as?

Indemnity is the principle that underpins most insurance policies, ensuring that the insured is compensated for their loss without making a profit from the claim. It is designed to restore the insured to the same financial position they were in immediately before the loss occurred. This principle emphasizes that the insured should receive enough compensation to cover the actual loss, but not more than that. Indemnity maintains fairness and prevents individuals from exploiting the insurance system by profiting from claims.

The other options, while related to insurance and risk management, do not encapsulate this specific principle of restoring the insured to their prior position. Restoration, for instance, is a more general term that may imply repairing or putting back to original condition but does not necessarily reference the financial aspect of compensating for a loss. Subrogation, on the other hand, involves the insurer taking over the rights of the insured to pursue recovery from a third party responsible for the loss. Lastly, satisfaction typically refers to fulfilling a requirement or obligation but does not capture the essence of the financial recovery principle inherent in indemnity.