What Does Contract of Indemnity Mean?
A contract of indemnity is a legal agreement between two parties in which one party agrees to pay another party for a loss or damage that meets certain criteria and conditions, barring certain specified circumstances.
An insurance contract is one type of contract of indemnity.
Insuranceopedia Explains Contract of Indemnity
In an insurance contract, the insurance company promises to pay a specific amount to the insured for losses or damages if the latter pays the premium (the contract condition) and if the damages or losses are not listed as exclusions in the contract.
The contract is valid for a specific period of time. Past that period, all of the parties involved are relieved from their contractual obligations. In the case of insurance, this means that the company is no longer obliged to pay the insured if they incur a loss.