Indemnity insurance is a type of insurance policy that compensates an insured party for certain unexpected damages or losses up to a certain limit. It is a comprehensive form of insurance compensation for damages or loss, and in a legal sense, it may also refer to an exemption from liability for damages. Indemnity is a contractual obligation to compensate an individual or business for damages or losses they experience. The insurer promises to make the insured party whole again for any covered loss in exchange for premiums the policyholder pays.

Indemnity insurance is designed to protect professionals and business owners when found to be at fault for a specific event such as misjudgment. It is a supplemental form of liability insurance specific to certain professionals or service providers. For example, medical malpractice insurance is a form of indemnity insurance that protects physicians from lawsuits.

Indemnity insurance represents an important protection for businesses and professionals. In the event that a customer is dissatisfied with the companys work, this type of insurance will pay for the insureds legal defense and defray any settlement costs.

In summary, indemnity insurance is a type of insurance policy that compensates an insured party for certain unexpected damages or losses up to a certain limit. It is a contractual obligation to compensate an individual or business for damages or losses they experience, and it is designed to protect professionals and business owners when found to be at fault for a specific event such as misjudgment.