7. Distinguish Between Indemnity and Non-Indemnity Insurance | Eastern Kentucky University - Edubirdie

University:
Eastern Kentucky University
Course:
LGS 300 | Introduction to Legal Studies
Academic year:

2022
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211

Pages:

1
Author:

folclord7m

7. Distinguish between indemnity and non-indemnity insurance Indemnity Insurance Definition: Indemnity insurance is a contract where the insurer undertakes to compensate the insured for actual loss or damage suffered due to a specified event. The insured is put in the same financial position they were in immediately before the loss — no better, no worse. Examples:     Property insurance (e.g., home, car, contents) Fire insurance Burglary insurance Liability insurance Key Characteristics: Feature Measure loss Description Based on the actual value of the item or loss Insurable interest Must exist at the time of the loss Purpose To compensate, not to profit Claim amount Limited to actual loss or the sum insured, whichever is lower. Indemnity is the most common form of insurance in non-life sectors. Non-Indemnity Insurance Definition: Non-indemnity insurance (also called benefit insurance) is a contract in which the insurer agrees to pay a fixed sum of money upon the occurrence of a specific insured event — regardless of actual financial loss. The insured does not have to prove actual loss — only that the insured event occurred. Examples:    Life insurance Personal accident insurance Funeral cover Key Characteristics: Feature Measure of loss Insurable interest Description Irrelevant – payout is determined Must exist at inception (net necessarily at the time of death/event) Purpose To provide financial assistance, not compensation for specific losses Claim amount Fixed benefit agreed in the contract Non-indemnity contracts are exceptions to the general rule of indemnity, often used in personal and life insurance sectors.

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