To indemnify is best described as which of the following?

Indemnification is a fundamental concept in insurance and risk management, best described as the act of restoring lost value to an individual or entity after they have incurred a loss. This means that when one party is indemnified, they are compensated for their losses to the extent that their financial position is made whole again, returning them to a state similar to where they were before the loss occurred.

In insurance, this principle ensures that the insured is not left in a worse financial situation due to a claim. It emphasizes that insurance should provide a benefit that covers the value lost as a result of the covered event, whether that be damage to property, injury, or other losses outlined in the policy. Therefore, when one is indemnified, they are effectively restored in value for the specific loss suffered.

The other options do not accurately capture the essence of indemnification. Reducing net worth does not align with the purpose of indemnification, which is to restore rather than diminish value. Replacing insurance coverage and adding coverage to a policy are actions related to obtaining or modifying insurance policies but do not refer to the process of compensating for losses that have already occurred. Thus, the description of indemnification as restoring lost value is the most accurate interpretation of the concept.