Understanding Indemnity Insurance
Indemnity insurance is a traditional type of insurance where an insurance company gets paid a fee. Indemnity insurance is used to compensate beneficiaries of policies for the actual value of their economic losses, up to the amount limited by the policy. Indemnity insurance normally requires the person who is insured to prove the value of the loss before he or she can recover.
Recovery under indemnity insurance is limited to the value of the loss that is provable, even if the policy’s face amount is greater. There are many different types of indemnity insurance, such as personal indemnity, health insurance, and professional indemnity insurance. This insurance works as a means of financial support if a policy holder happened to get sued for damages.
Types of Indemnity Insurance
The most basic type of indemnity insurance is a health insurance policy. A typical health insurance policy can be either a group policy or an individual. Both provide coverage for any medical costs are included in the policy, or rather, that are not excluded. An exclusion can be an issue such as a preexisting condition or other issues that a health insurer chooses not to provide for in the policy. Coverage in this type of indemnity insurance usually depends on the health of the policy holder when getting the policy.
Personal indemnity insurance is given as a form of a renters or homeowners insurance policy. The insurance company usually offers a policy that will indemnify if a policy holder has losses that are covered according to the terms of the policy. Individuals who pay a landlord rent can be sued for being the cause of damage. This is also applicable for landlords that do not repair or fix a previously acknowledged problem with or on the property. In either situation, a landlord or individual would have to pay for any damages that the other party suffered.
Professional indemnity insurance is a form of a professional liability insurance policy. The policy provides protection to the policy holder for any actions that may cause harm or impose damages to a client. Examples of this can oversights that happen while performing a certain service. For example, many professional services tend to have errors and omission coverage that pays for any legal costs in the case of a lawsuit brought by a client.
Indemnity Insurance Coverage
The amount of coverage required in an indemnity insurance policy relies on the type of policy purchased. Most insurers require a minimum coverage amount for a professional policy while a personal indemnity policy needs enough coverage for possible injury or damage that occurs.
Indemnity Insurance Fees
All indemnity insurance policies have limits as well as fees. These fees can be the deductible and the co-insurance payment. The purpose of these fees is to lower overall costs by having the policy holder pay a bit of the expenses.