What do you understand by the term Indemnity?

Indemnity is said to be the legal philosophy upon which the concept of most insurance policies rests. Strictly speaking, indemnity is the protection from loss and damage claims that is filed by another person.

For instance, the owner of an amusement park may have indemnity insurance to compensate visitors that has injured on his or her property. Only a legal lawsuit that is brought against the park owner could result in additional punitive damages. The holder is protected by indemnity insurance from suffering financial loss due to a lawsuit.

Principle behind indemnity

There is a principle behind indemnity and that is a financial restoration to a level just before the accident or injury or illegal act. Indemnity is used as a measuring stick for damages by most laws concerning civil court actions.

If for the actions of the defendant a plaintiff is entitled to compensation, the amount that is awarded should only bring him or her back to a state of wholeness. Whatever actual losses were suffered would be repaid, but the repayment of punitive damages would be a separate matter.

Many people encounters indemnity situations

Indemnity situations are encountered by many people and they don’t even realize it. An indemnity clause is present in many rental agreements which prevents the customer from suing the rental agency for damages caused by use of the equipment. Leases for apartments may also contain indemnity clauses by which claims are limited against the owners in case of accidents. Whenever a ticket is purchased for a sporting event or concert, an indemnity agreement between the ticketholder and the venue itself is a part of the condition of admission.

An indemnity claim will hold up in court proceedings

Even if you can’t find the word ‘indemnity’ then there may be an agreement to ‘indemnify’ another party. This means that you are agreed that you will not hold someone else responsible for any accidents or injuries that you may suffer while on his or her property. Not always but sometimes an indemnity claim will hold up in court proceedings. Claiming indemnity from damages does not always mean that it is a protection from liability. Even if the renter signed an indemnity clause as part of the lease, a property owner may still be responsible for injuries on his property.

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Tagged as: financial loss due to a lawsuit, Indemnity, indemnity agreement, indemnity insurance, insurance policies, punitive damages