What Is Indemnity? |

What Is Indemnity?

| By Jack | Category: Knowledge

What is indemnity? The definition may be slightly different depending on what type of insurance policy it relates to. In general terms, it is the protection from loss and damage claims that may be filed against you by a third party. The principle behind indemnity is the financial restoration of a person, to the same level they had just before the accident, injury, or illegal act.

Professionals, such as lawyers and accountants, will have professional indemnity insurance in the case of a lawsuit being filed by a client for loss suffered by negligence.

Examples of Indemnification

Often there are indemnity clauses in rental agreements that people just don’t realize they are there when they sign the agreement. If you rent a piece of equipment there may be a clause indemnifying the equipment owner from any accident you may have while using the equipment. Buying a ticket to a baseball game automatically indemnifies the owners of the ballpark from any injury suffered by being hit by a wild baseball.

Another area where indemnity clauses feature heavily is that of automotive insurance. There are different types of indemnification that may appear in a policy document. One such clause is the Lien Holder’s Insurance Indemnity Clause. This is a clause stating that the car insurance must be in the same name as the car loan contract. This is to ensure that the company providing the loan is covered for financial restitution in the event of the vehicle that is insured being involved in an accident, or suffering damage.

Another main form of auto insurance is the “indemnity insurance policy” which created a strict relationship between the indemnitor and the indemnitee so that the indemnitee had every reason to protect himself against claims resulting from a motor accident.