What is the term used for restoring the insured to their original condition before a loss?

The term used for restoring the insured to their original condition before a loss is indemnification. This principle is foundational in insurance, as it ensures that the insured is made whole again after a loss occurs, without allowing them to profit from the situation. Indemnification reflects the idea that insurance is meant to cover the loss and thereby return the insured party to the financial position they were in prior to the loss, rather than providing a windfall.

Restitution generally refers to the act of restoring someone to their original state, but it is often used in a legal context involving wrongs that need to be corrected, rather than in terms of the specific insurance mechanism. Compensation is a more general term that involves recompense for loss or injury but does not specifically capture the insurance principle of making someone whole after a loss. Reparation is similar and often refers to measures taken to repair or compensate for wrongs or injuries, but it is not legal terminology specific to insurance claims. So, indemnification is the most accurate and specific term relating to the insurance process in this context.