A contract of insurance against damage to property is a contract of indemnity, often described as a contract to hold someone harmless.
Those principles are highlighted in this recent court of appeal judgment.
The court said that a lay person may think that that involves “…a promise by the insurer to pay money representing the diminution in value or costs of the repair damage. That is not, however, the nature of the promise. The promise is to hold the assured harmless in the sense that the insurer promises that the assured will not suffer the insured damage”,
and further;
“The consequence is that the measure of recovery in a property insurance claim is that provided for by common law principles governing damages for breach of contract, the general object of which is to put the innocent party in the same position, so far as money can do it, as if the breach had not occurred, subject to express terms in the policy. The amount of recovery will be assessed in accordance with those common law principles, including causation, mitigation, remoteness, date of assessment and criteria for assessment such as market value or cost of repair or replacement.”
That is of course subject to any express policy terms to the contrary. The principles don’t differ materially from South African insurance law.