Indemnity Insurance Simplified

While the concepts involved are really quite simple and easily understood, any discussion of personal indemnity insurance will often leave individuals confused and not knowing what to do.

Indemnity insurance is put in place to protect against the risk of significant financial loss as a result of any damage or injury that the policyholder might cause to a third-party. In its simplest terms, indemnity insurance protects you from financial loss if you are sued by a third-party and you are held liable for damages.

However, the insurer not only pays for any damages, they will also usually pay for any legal bills that the insured might incur in defending any court action. In fact, they will also usually provide assistance in defending any action and will pursue recovery of costs if you are successful in your defense.

There are generally two types of indemnity insurance that most individuals will need to consider, personal and professional.

Professional indemnity insurance is designed to protect professionals such as doctors, lawyers, consultants, etc... against damages caused to clients as a result of their actions or inaction and is often referred to as Errors and Omissions Insurance. Should any action or inaction on the part of the professional result in damages being awarded a client then the insurance company would pay thus reducing the financial impact on the insured.

Personal indemnity insurance provides similar protection ot individuals but the damages are not related to work done for clients but rather protects against legal action resulting from some act of negligence on the part of the insured that caused damage to a third-party. A child injured as a result of having left access to your swimming pool open or a landlord's negligence resulting in injury to a tenant, are examples that would be covered by personal insurance. As with professional indemnity insurance, the insurance company would cover the insured for any losses and would also pay for legal fees and assist in the defense.

In today's world, the likelyhood of being sued is far more likely than we would like it to be which is why it is so important to have indemnity insurance in place to protect against serious financial loss. Your insurance agent is the best person to advise you on what coverage is best for you but you need to take action and take it now!


For more information go to Personal Indemnity Insurance for more information about indemnity insurance.