(i) Bank Draft : A bank draft is a type of a cheque drawn by a bank either on its own branch or on another bank in favour of a third party. It is payable to the person named in it or to his order. It is always payable on demand and is, therefore, also known as 'demand draft.'A bank draft is the most convenient, and safe means of sending money from one place to another. The persons who wants to purchase a draft fills in the prescribed form available with the bank. The form duly filled in along with the amount of draft plus commission is paid to the bank, who issues the draft. He then sends the draft to the receiver by post or courier. The receiver can get the amount of the draft from the concerned bank.
(ii) Principle of Indemnity : The word indemnity means security against loss. It implies a promise to compensate in case of a loss, except life insurance. The insured will be compensated only upto the amount of loss actually suffered by him. The maximum amount of compensation will be upto the sum insured or the value of the policy. The insured party can not make a profit out of this insurance contract.