General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
When an insurer wrongfully refuses to pay a covered claim, the measure of the insured's recovery in a contract action is generally aimed at:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Contract remedies are compensatory: a successful breach-of-contract plaintiff is entitled to the benefit of the bargain, meaning the position the party would have occupied if the contract had been performed. For a covered claim wrongfully denied, that is payment of the covered benefit. Punitive damages are not the ordinary measure in a simple contract action (they are reserved for separate tort claims such as bad faith), and the court does not rewrite the policy.
Why the other options are wrong
- B) Punishment is the aim of criminal or punitive awards, not the normal measure of contract damages.
- C) The remedy flows from breach of the promise to pay covered benefits, not from returning the premium.
- D) Courts enforce the contract as written; they do not manufacture obligations the policy never contained.
Memory hook
Contract damages deliver the promised check, not a bonus or a new policy.