Definition - What does Indemnity mean?

Indemnity is compensation or payment for losses or damages as part of a contractual agreement or insurance policy between two parties—the insurer and the insured—in return for premium payments.

Insuranceopedia explains Indemnity

For example, if person A enters into a life insurance contract with Company B for Company B to shoulder the losses suffered by his family in the event of his death in exchange for his payment of premium, upon his death while the contract is still valid, Company B will pay to his beneficiaries as an indemnity the amount that they agreed upon as the equivalent compensation for his lost life.

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