In which scenario would an insurer not fully indemnify a policyholder?

In the context of insurance policies, the principle of indemnification is crucial as it ensures that the insured is made whole after a loss, without allowing them to profit from the claim. The scenario where an insurer would not fully indemnify a policyholder occurs if the policyholder changes jobs without notifying the insurer.

In many insurance contracts, especially those related to health or life insurance, policyholders must provide accurate and up-to-date information about their employment status. A change in employment can affect risk assessments and premium calculations. If a policyholder fails to inform the insurer about such changes, this may be considered a misrepresentation or non-disclosure that could lead to a claim being denied or reduced.

This principle reflects the importance of full disclosure in insurance contracts. Insurers rely on the information provided to assess risk and determine coverage terms. Therefore, not informing the insurer about a job change can lead to a situation where coverage is affected, resulting in an inadequately indemnified situation if a claim arises related to that employment change.