What is Indemnity Insurance?
Indemnity means compensation or protection against the loss. It is a contractual obligation that one party guarantees compensation in case of any potential damage, loss or liability incurred by another party from claims of any third party.The purpose of indemnity is to transfer the risk claims of third party to the party best suited to bear the risk losses.
What is Indemnity in a legal sense?
In legal sense indemnity is an exemption from liability against any loss. Liability insurance provides protection against the claims to the insured party resulting from any damage and injuries to person or property.
Who is indemnitee??
An indemnitee is a person or organization that receives indemnity or the people or party who can claim for protection or security against damage or loss, or compensation for damages or money spent.
Who is an indemnitor??
The indemnitor or party obligated to cover the loss,damage or liability can purchase a bond or other mechanism to protect the indemnitee in the event of a default by the indemnitor.
What is an example of indemnity insurance?
If someone owns an automobile workshop owner, he is an indemnitee in an automobile indemnity coverage.Its means the company is going to cover any losses that incurred suffers from an accident.An indemnity agreement operates to transfer the liability of the automobile owner,the indemnitee to the workshop owner the indemnitor.
If we talk about construction business.The owner is an indemnitee while the contractor is an indemnitor. An indemnity agreement operates to transfer the liability of the owner, the indemnitee, to the contractor, the indemnitor if a person got an injury on a construction site as the contractor is in the best position to manage and bear risk.
Why is indemnity insurance designed?
Indemnity insurance is specifically designed for the entrepreneurs and professionals when found to be at fault for specific events such as misjudgement.It is sort of traditional insurance that is offered to buyer and lender when the defect in the title is such that it cannot be resolved.
What are the similarities and differences between indemnity and insurance??
The similarity between indemnity and insurance is that both explain a situation in which one individual guard himself against financial losses that may be suffered and need compensation.This step ensures that he may achieve financial stability
|Indemnity Insurance||Indemnity is the agreement that one party holds in bearing loss and providing compensation to another party that suffered losses.|
|Insurance||In exchange for a payment done transferring risk from one party to another is called insurance.|
|Indemnity Insurance||Indemnity is a contractual agreement between two parties for which the injured party will receive compensation for any losses.|
|Insurance||Insurance is made to guard against any losses suffered and can be done as a periodic payment|
What are types of Indemnity Insurance?
Types of Indemnity insurance includes
- Professional Indemnity
- Personal Indemnity
- Health Insurance
Professional Indemnity Insurance( PI)
- Liability Insurance
- Errors & Omissions (E&O)-Most commonly in the US
What is Professional Indemnity Insurance?
Protects the owner of business
In case he makes a mistake in work produced for client
In case the advice provided to client cause financial harm to the client
Who must consider carrying professional indemnity insurance?
A wide range of professionals can get benefit from PI
- Legal Professionals
- Financial Advisors
- Energy Contractors
- Construction Contractors
- Media Creatives
- IT professionals
- Mortgage intermediaries
- Alternative Investment managers
- Healthcare professionals
- Social Workers
What are the benefits of PI?
- Any expenses and legal cost in defending claim and payable compensation to CLIENT is covered by PI
- Procedure of getting PI is simple and quick
- Give peace of mind in case of any mistake
- Compulsory for Offering advice and services in UK
- Covers mistakes
- Violation of copyright
- Unintentional Confidential breeches
- Professional Ignorance
- Lost and damaged documents
- Data protection
How does PI insurance work ?
It works on claim made basis
- Select policy that suits your business industry
- Policy must reflect your business essential need
What coverage does PI provide?
- Coverage depends on claim made basis and is must in policy period that means only claims during the policy period will be covered despite when the incident actually occurred.
- The other one is claims occurring coverage that includes errors , omissions and negligence committed work during the policy period will be insured against any loss or claim. This only covers work done during insurance coverage period.
What PI coverage doesn’t include?
Legal Liability under civil law
Professional Indemnity insurance claims in :
|Defamation And Malicious Falsehood||1 year|
|Personal Injury||3 years|
|Debt Arising Under Statute||6 years|
|A Contract||6 years|
|Awards In Arbitration||6 years|
|Breach Of Trust||6 years|
Extended reporting period coverage(Tail Coverage)
“Tail” or “extended reporting” endorsements extends the reporting period only for claims after policy expiration date up to 6 months or one year.
Cover events that occur while the policy is in force
Usually reported to the carrier after the policy terminates
Civil liability insurance
The package of civil liability insurance includes more than standard coverage. Unlike Standard Coverage it includes intellectual property, defamation,breach of contract, personal injury,security ,breach of warranty and cost of contract.
What is an indemnity health insurance plan?
An Indemnity health insurance plan also known as traditional indemnity plan or fee-for-service plan.
It is a healthcare plan that allows you
- To choose the doctor, healthcare professional, hospital or service provider
- To choose a professional of your choice
- Greatest amount of flexibility and freedom in a health insurance plan .
Want to know about health insurance???