A contract of insurance means to get into a contract which helps you bear your risks at the time of an unwanted event that can put you in a loss. Also, Principle of Indemnity means to get oneself in a state as they were before the mishappening. Getting into a contract of insurance cannot be done to make profits. It just refrains you from getting into sudden losses at that moment. Instead of paying a huge lumpsome money at the time of the unwanted/unexpected event, one can pay them yearly/half-yearly/ monthly/quearterly in the form of premium which the insurer provides us. The insured is therefore, ensured (after taking the contract) that in the event of loss he will occupy the same position he did just before the happening of the event.
Thus, one can say that a contract of insurance is a contract of indemnity.
