Q.The principle under which an insured can recover only the actual financial loss suffered, and no more, is called the principle of:

Several fundamental principles of insurance work together, but only one specifically limits HOW MUCH the insured can recover on a claim. …

The Principle of Indemnity ensures that (outside life and personal-accident insurance) the insured can recover only the actual financial loss suffered, no more — preventing insurance from becoming a source of profit from an unfortunate event. Utmost Good Faith (option a) concerns honest disclosure of material facts; Insurable Interest (option b) concerns having a genuine financial stake in the subject-matter; Subrogation (option d) …

Confusing Indemnity with Insurable Interest — insurable interest is about WHO can validly insure something (a genuine stake), while indemnit …