The insurance company … my uncle for the loss of his car.

Analyze the question: The sentence is about an insurance company giving money to my uncle because he lost his car. We need the word that means to make up for a loss or damage.

Explain the concept: This is a vocabulary-in-context question. Look at each word's meaning and the structure it takes.

• Redeemed: to buy back, recover, or save (e.g., redeem a pledge, redeem a voucher). It doesn't fit, since the company didn't buy back anything.
• Relieved: to ease pain, worry, or duty (e.g., relieved of his post). It doesn't fit a loss of property.
• Compensated: to give money or something else to make up for a loss, injury, or damage. The usual structure is compensate someone for something, which matches "compensated my uncle for the loss of his car."
• Paid: it could seem possible, but "paid my uncle for the loss" is not the standard usage. We say "paid him money" or "paid for a service." "Paid for the loss" would suggest the company paid out of its own pocket for something, not that it made good a loss. The word that specifically means making up for a loss is compensated.

Solution: The sentence has the pattern: [Insurance company] + [verb] + [person] + for + [loss]. The verb that fits "[person] for [loss]" best is compensated.

"The insurance company compensated my uncle for the loss of his car."

Answer: C. compensated

Tip: In insurance, accident, and injury contexts, think "compensate ... for ...". Whenever you see a loss, damage, or injury that must be made good, compensate is usually the answer.