1. The principle of indemnity is best reflected in:

Property and health expense coverage that restores, not enriches

Indemnity restores the insured to the pre-loss position; expense-based health and property coverage reflect this principle.

2. Adverse selection describes the tendency of:

Higher-risk individuals to seek insurance more than average

Adverse selection is the tendency of greater risks to seek or keep coverage, managed through underwriting.

3. Insurance contracts require utmost good faith, meaning:

Both parties must deal honestly and disclose material facts

Utmost good faith requires honesty and full disclosure of material facts by both parties.

4. Because an insurance policy is a contract of adhesion, ambiguities are generally:

Construed against the insurer that drafted it

In contracts of adhesion, ambiguous language is construed against the drafting party (the insurer).