Does Your Business Need Indemnity Insurance?
From real estate to general liability, there are many types of insurance that businesses must have. Although they all have a different purpose, they have an important function that they fully protect the insurance company against the losses. This is known as “indemnity insurance”. Most insurances are a form of indemnity insurance because they are aimed at curing the other party for losses that may suffer during the insurance period.
Although indemnity insurance is not a specific policy, it plays a critical role in the type of insurance your business requires.
What is indemnity insurance?
For insurance, reimbursement can also mean that the legal responsibility for operations or actions is guaranteed. As such, a liability insurance company pays for the damage that occurs in a covered claim.
Who needs indemnity insurance?
This usually applies to professional service providers who may make a mistake that could result in loss or damage to the customer who needs compensation insurance.
Here are some common professions needed to get employee indemnity insurance:
Although these professionals must obtain professional indemnity insurance to retain the license, all businesses can benefit from non-life insurance, whether it is professional services or other business obligations or the need for commercial real estate.
How does indemnity insurance work?
With indemnity insurance, there are different ways to pay for financial losses:
- Repair or replace damaged property
- Payment of the value of the damaged property
- Payment of investigations and legal costs for complaints
Different types of insurance indemnify different types of losses. Commercial real estate insurance reimburses, for example, loss of leased buildings, fixtures and fittings, including materials and equipment. General liability insurance reimburses the insured against unintentional losses that occur during his business.
The type of policy you have determines your coverage, as well as policy exclusions. For example, most tort law policies provide no protection against misconduct or intentional harm.
If a loss occurs, the policyholder contacts the insurance company to advance a claim. The carrier then appoints a replacement representative who will fully assess the damage and coordinate payments based on the terms of the contract. If a third party is involved, the payment will be made directly to the party and not to the policyholder.