Indemnity Basis

What Does Indemnity Basis Mean?

An indemnity basis refers to the amount of money an insurance company will pay for a claim, based on the terms outlined in the policy. This means that the insurance company may pay for the damage or loss either in full or in part, depending on the specific terms of the insurance contract.

Insuranceopedia Explains Indemnity Basis

Indemnity in insurance is a concept based on the principle that a person should only be compensated for a loss, not profit from it. The indemnity basis in insurance ensures that this principle is upheld in the insurance policy. When a person insures a risk, the insurer determines the amount of money to be paid out if the risk occurs. Ideally, this amount is aligned with the cost of the loss and does not exceed it.