Indemnity Period

What Does Indemnity Period Mean?

Insuranceopedia Explains Indemnity Period

Disability and business interruption policies compensate the policyholder up to a certain amount for a specified duration, known as the indemnity period, which varies from policy to policy. The limit on the benefit period encourages the policyholder to take steps toward recovery—whether physically, in the case of a disability, or financially, in the case of business interruption. Additionally, it limits the insurer’s financial liability, helping them remain profitable and financially stable. Without such limits, insurers would likely struggle to remain operational if benefits were paid indefinitely.