What does Indemnity mean in insurance?

Author - Webner
6.12.2017
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Indemnity in insurance means in case the loss (financial or death) happens the insurer has to bring the state (in whole or part) of the insured back to what it was prior to the loss. What does Indemnity mean in insurance?Indemnity is the obligation that one party holds in paying compensation to another party that suffered losses. For example if a car accident happens insurer has to pay the car repair charges in part or whole according to the terms of car insurance policy. In case of life insurance if the insured dies, insurance company has to indemnify the family of insured with life insurance proceeds (sum assured) which will help the family to maintain its lifestyle to the same level as before the death of insured (again the exact details including amount depend on the terms and conditions mentioned in the policy). In case of health insurance if the insured becomes unwell and is admitted to a hospital the individual is to be indemnified by the insurance provider to cover the medical expenses.

 

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