General Insurance
An unfortunate element of today’s society is that many people sue when unnecessary and when they may not have in the past. This is especially detrimental in today’s economic culture. A lawsuit against you can cost you thousands in legal costs, not to mention the exorbitant cost of settlements. Dealing with a lawsuit in a family or business could mean the difference between floundering and staying above water. One way to ensure that an individual or business can weather a lawsuit is indemnity insurance.
What is it?
Indemnity insurance is a broad category of insurance. To indemnify basically means to make one whole again. This means that this type if insurance is designed to bring a party back to the same place they were financially after a loss, as they were prior to the loss occurring. This type of insurance is offered as a personal policy, but is more often sold as a professional policy, called errors and omission insurance. There are also health insurance policies called indemnity policies that provide limited coverage in relation to standard health insurance policies. Indemnity policies may also cover life insurance as well.
How does it work?
From a professional standpoint, this coverage would be used by people performing services, such as a doctor, massage therapist, lawyer, accountant, financial advisor, etc. In the situation a policyholder caused financial or real injury to a client, either by their malpractice, failing to complete a contract, bad advice, libel or slander, or other acts of negligence, their professional indemnity insurance policy would pay the claim. If the claim was unwarranted or false, the insurance company will also pay to defend the claim as well. Personal policies act similarly. In the movie Along Came Polly, this is the type of policy Ben Stiller’s character was trying to underwrite. It can work to protect someone if they say something to slander someone and are sued, and also sometimes will cover injury or death of the policyholder if that is within the contract. Different insurance providers may have different terms and requirements for their indemnity policies, so reviewing these carefully to ensure that a person knows their policy and its limitations is important.
How much do you need?
If one has a large claim, and the legal costs and the amount of the settlement go over the limits of their indemnity insurance policy, they may still end up having some personal financial responsibility for the claim. These costs can be hazardous to the financial wellbeing of a family or business. Therefore, it is important to ensure that the limits purchased for the indemnity policy to cover them adequately. Consulting a professional to determine the risk level of the person or business endeavor to be insured may be a smart way to ensure that one gets the correct amount of coverage.
Expert Tips and Info
One thing to consider is that the riskier a person is, in their personal or professional life, the higher the cost of the corresponding indemnity insurance policy will be. For instance ifs someone is looking for a personal indemnity policy, and they participate in extreme sports, or are known for making outrageous verbal claims against others, they may not be able to get an indemnity policy at all. On the same token, if a doctor participates regularly in the practice of offering experimental treatments and performing complicated surgeries, their coverage may cost more than that of a regular family doctor.