Indemnity

What Does Indemnity Mean?

Indemnity refers to compensation or payment for losses or damages, typically as part of a contractual agreement or insurance policy between two parties—the insurer and the insured—in exchange for premium payments.

Insuranceopedia Explains Indemnity

For example, if Person A enters into a life insurance contract with Company B, agreeing that Company B will cover the losses suffered by his family in the event of his death in exchange for his premium payments, then upon his death (while the contract is still valid), Company B will pay the agreed-upon amount to his beneficiaries as indemnity, serving as compensation for his loss of life.