Final answer:
The act of compensating another in the event of loss is called indemnification. It refers to the process where one party provides financial protection or reimbursement to another party for any losses, damages, or liabilities that may occur.
Step-by-step explanation:
The act of compensating another in the event of loss is called indemnification. Indemnification refers to the process where one party provides financial protection or reimbursement to another party for any losses, damages, or liabilities that may occur.
An example of indemnification is when an insurance company compensates a policyholder for the loss or damage covered by the insurance policy. The policyholder pays regular premiums to the insurance company, and in return, the insurance company indemnifies the policyholder by covering the financial costs incurred due to the covered event.
Indemnification is an important concept in both personal and commercial insurance. It provides individuals and businesses with a means of protecting themselves financially against unexpected losses or damages.