What is make-whole doctrine? Simple Definition & Meaning

Definition of make-whole doctrine

The make-whole doctrine is a principle in insurance that states that an insurer will not receive any of the proceeds from the settlement of a claim, unless the insurance policy provides otherwise. This means that the insured will be fully compensated for their loss before the insurer can receive any funds.

For example, let's say that John has a car insurance policy with a $10,000 limit for damages. If John gets into an accident and the damages cost $8,000 to repair, the insurer will pay the full $8,000 to John to cover the cost of the damages. However, if the damages cost $12,000 to repair, the insurer will pay the full $10,000 limit of the policy, and John will have to pay the remaining $2,000 out of pocket.

The make-whole doctrine ensures that the insured is fully compensated for their loss before the insurer can receive any funds. This protects the insured from being undercompensated for their loss.

Simple Definition

The make-whole doctrine is a rule in insurance that says the insurance company cannot keep any of the money from a claim settlement unless the settlement amount is more than what is needed to fully compensate the person who suffered the loss. This means that the insured person should receive all the money they are entitled to before the insurance company can take any of it.

Legal Definitions - make-whole doctrine

Definition of make-whole doctrine

Simple Definition