What is Indemnity?

Answer:
Quite simply, indemnity is protection against future loss.

This can be an explicit agreement between two parties, such as a renter and the landlord in a rental agreement. Indemnity can also be implied, as in the use of a sign that says “Proceed At Your Own Risk.”

This concept is the basis of the modern insurance industry, as many insurance policies provide protection for the holder in case someone gets hurt on their property, using their materials or acting on their behalf. The purpose of the indemnity insurance is to restore the injured party to the way they were prior to the incident. This might include covering medical bills, fixing damage to a car, or reimbursing them for expenses. It does not include punitive damages, or damages awarded to punish the insured.


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