Insurance policies are made to benefit both the insurer and the insured. The main purpose of an insurance policy is to provide protection of their clients to possible damages and losses unforeseen.
Indemnity is the philosophy that stands behind the concept of insurance policies. It means protection against losses and damages from any claims. This is a contract between two parties to compensate whatever damages and losses may occur.
For instance in a game park, if accident may happen such as a kid gets injured in your property, your indemnity insurance will pay all the expenses until the kid will be back in his good body state but nothing more than that. However if the parents of the kid or anyone injured will file a case against you for the accident, then the insurance company will not be liable for that suit.
The concept behind any insurance policy lies with indemnity. It lies in the principle of restoring financially the person involved back to its normal state before the injury, accident and even legal acts. If the person harmed is to be given with compensation from the damages or losses caused by the defendant, the amount of money to be awarded to the injured person should only be up to the point that he/ she will be back to wholeness state. The actual losses are the only things to be repaid but lawsuits or punitive damages will be another thing.
There are many indemnity situations that we encounter and we just don’t realize that we are at front with it. Rental agreement would contain indemnity clause that will prevent apartment owners to any claims of accidents in the property. Whenever you watch a concert and buy a ticket for that show, an indemnity agreement for that show has already been laid. Or if accidents may happen in a soccer game, indemnity agreement will protect for those accidents to possible lawsuits.
Although the word indemnity is not visually written in the document, an agreement is already meant during the settlement. This strongly means that whatever accidents, damages, or injuries may happen within inclusively in your property, the plaintiff will not be held responsible for the cost of payment.
On the other hand, some indemnity clauses are made implied. For instance, you may read a sign saying “Don’t play inside the building, under construction”- this is an example of implied indemnity. If you choose to play inside the building and you get injured, then there is no reason for you to sue the owner to pay for any medical expenses since a warning has been given. Owners should always be careful with this situation since the second party could file for court proceeding if they want too.
To avoid big losses on the owner’s part, he / she should have an indemnity insurance that will provide the beneficiaries a pay out of their losses up to the limiting amount of the policy. The insured sure therefore be accountable to know and to prove to the insurer the exact amount of loss to be recovered. Recovery is only up to the proved loss even if the policy amount is higher.