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What is indemnity insurance?

Indemnity insurance is a type of traditional insurance in which a fee is paid to an insurance company. There are different types of indemnity insurance, including personal indemnity, professional indemnity and health insurance. Indemnity insurance functions as a source of financial support in the event that a policy holder is sued for damages.


Personal indemnity insurance is a type of insurance that is offered as a homeowners or renters insurance policy. The insurance company offers a policy in which it will indemnify a policy holder for any losses covered by the policy. Individuals that pay a landlord to live on a property can be sued if they cause any type of damage. This is also true for landlords that fail to repair or correct a previously identified problem with the property. In either case, an individual or a landlord would need to pay for damages suffered by the other party.


Professional indemnity insurance is a type of professional liability insurance policy. The insurance policy offers protection to a policy holder for actions that cause harm to a client. This can include mistakes or oversights that can occur while performing a service. One type of coverage that most professional services typically add to an insurance policy is called errors and omissions coverage. The insurance will typically pay for legal costs of the policy holder in the event of getting sued by a client.


The most basic type of indemnity insurance is a health insurance policy. A traditional health insurance policy can come in the form of an individual policy or a group policy. These types of policies provide coverage for medical costs that are not specifically excluded in the policy. Exclusions can include a pre-existing condition or some other type of health issue that a health insurer does not want to include on the policy. Coverage is usually dependent on the health of the insured at the time the policy is issued.


All types of indemnity insurance whether personal, profession or health insurance contain limits and fees on its policies. Fees can include a deductible as well as a co-insurance payment. The deductible is an out-of-pocket expense that an insured party pays before the policy will cover any additional costs. A co-insurance payment is a percentage of costs that the policy holder needs to pay before the policy will cover the remaining costs. These fees are designed to lower costs by having the insured party pay a small portion of the expense.


The amount of coverage that is needed for an indemnity insurance policy depends on the type of policy that is being purchased. Many insurers will require a minimum amount of coverage for a professional indemnity policy. A personal indemnity policy will need to have enough coverage to pay for any damage or injury that occurs. Coverage amounts can start at £195,000 and can go as high as £0.6 million or more for coverage.

About the Author

Cameron Easey has over 15 years customer service experience, with eight of those years in the insurance industry. He has earned various designations from organizations like the Insurance Institute of America and LOMA. Easey earned his Bachelor of Arts degree in political science and history from Western Michigan University.

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