Which principle states that insurance will pay no more or less than the actual financial loss suffered?

The principle that states insurance will pay no more or less than the actual financial loss suffered is known as the principle of indemnity. This principle ensures that an insured party can recover the exact amount of their loss, thereby preventing them from profiting from an insurance claim. Indemnity emphasizes that the compensation received should restore the insured to the same financial position they were in prior to the loss, without allowing for any gain or windfall.

While the other principles may relate to different aspects of insurance, such as ensuring fair distribution of losses among multiple insurers or addressing the rights of the insurer after compensation has been paid, they do not directly address the core function of indemnity, which focuses on compensating for actual loss. This is crucial in maintaining the integrity of the insurance system and ensuring ethical claims practices.