The Lords Insurance Blog

Making Insurance

Term of the Day

From our insurance terms section, this is the definition:

Indemnity – Restoration to the victim of a loss by payment, repair or replacement.”

In depth explanation:

An indemnity is a sum paid by person A to person B by a compensation for a particular loss suffered by person B. The indemnitor (A)  may or may not be responsible for the loss suffered by the indemnitee(B). Forms of payment include cash, repairs, replacement, and reinstatement.

For example, if John broke Jane’s billion dollar ancient vase, John would have to pay Jane as a form of indemnity by repairing it, replacing it, or just giving her a billion dollars.

Don’t be John and hang out with people who have billion dollar vases unless you’re looking for trouble.

How does it relate to insurance?

Indemnity Insurance. It’s a policy that protects business owners and employees when they’re found to be at fault for a specific event such as misjudgment. Usual examples of indemnity insurance include professional policies like malpractice insurance, and errors and omissions insurance, which indemnify professionals against claims made in the workplace.

Written by lordsinsurancelog

December 10, 2010 at 12:21 am

Posted in Daily Quip

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