While you may be familiar with the workings of insurance, the concept of indemnity may be new to you. Read on to understand what indemnity is and how it applies to today’s professional sphere.
What is the meaning and definition of indemnity?
The origins of the word indemnity find its roots in the Late Latin word indemnis. Indemnis stands for “unhurt” or “free from loss”. Hence, indemnities are also referred to as ‘hold harmless’ agreements.
Indemnities are contractual agreements that provide compensation for losses, damages, or liabilities sustained by another party. When you are indemnified, you are absolved from the responsibility for losses incurred during a mishap.
Under this, depending on the particulars of the contract, party A may bear the risk of loss suffered by party B totally or partially.
What are some examples of indemnity?
The concept and meaning of indemnity can be well understood through some examples.
1. Indemnity being a ‘hold harmless’ agreement
A crane manufacturing company sells cranes to a general contractor for use at a construction site. As part of the contract signed with the contractor, the company includes an indemnity clause that absolves the manufacturing company of losses in case one of the contractor’s personnel is injured while using the crane. The contractor here indemnifies the manufacturer.
2. Indemnity as insurance
A brokerage company purchases insurance for all its financial personnel errors and omissions. This policy protects advisors against negligence in case investments go downhill and accountants against being sued for mistakes in financial reports.
What is professional indemnity insurance?
Of the two examples above, the latter is professional indemnity insurance and depends on the agreement’s particulars. The policy name varies based on the nature of the profession covered. What is essential to understand is that, in professional indemnity insurance, the risk is transferred in exchange for a payment.
To better understand this, consider Bajaj Finserv’s professional indemnity insurance for doctors. This doctor’s liability insurance gives you coverage against risks arising in the professional sphere such as:
- Negligent misdiagnosis
- Incorrect medicine dosage
- Wrong suggested courses of treatment
You get coverage if a patient or third-party claims harm, injury, financial loss, or death due to the services rendered or advice given by purchasing the policy. You can also protect you, the insured medical practitioner, from libel and slander. As explained earlier, indemnity insurance involves risk transfer at the cost of payment.
With Bajaj Finserv, you get coverage of up to Rs. 1 crore, with premiums starting just at Rs. 9,440. Along with this, you get a dedicated customer support team and benefit from speedy claim redressals and 30-day settlement confirmation. The claim process is hassle free and involves 3 simple steps: claim intimation, document submission, and claim settlement.
It’s also important to point out that while indemnity insurances are comprehensive, they do not extend coverage to illegal activities, criminal acts, losses occurring due to terrorism and in this case, protection against treatment for diseases like AIDS.
Having understood what indemnity is, consider indemnity insurance for your professional work. If you’re a medical practitioner and seek coverage through Bajaj Finserv, apply for indemnity insurance today and get access to a doctor’s liability policy through a 5-step process.
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