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.
