How Does It Work? What Is Indemnity Insurance?
An insurance policy that compensates an insured party for certain unexpected damages or losses up to a certain limit—typically the amount of the loss itself—is referred to as indemnity insurance.
In exchange for the insured’s payment of premiums, insurance companies provide coverage.
Most of the time, these policies are made to protect professionals and business owners who are found to be to blame for something like a wrong decision or malpractice. Typically, they take the form of an indemnity letter.
Key Takeaways Indemnity insurance is a kind of insurance policy in which the insurance company promises to pay the policyholder for any losses or damages they incur.
When professionals and business owners are found to be at fault for a specific event, such as a misjudgment, indemnity insurance protects them.
Financial advisors, insurance agents, accountants, mortgage brokers, and attorneys are among the professions that are required to carry indemnity insurance.
Examples of indemnity insurance include insurance against errors and omissions and medical malpractice.
