Example of Indemnity in Insurance
Let’s say that a person who owns a car has full coverage insurance for their car. If there is an accident and the car is damaged, the insurance contract will lay out the conditions under which the company will pay for repairs. Let us say that the repair costs ₹100,000. Once the insured calls their insurance company to report the accident and the damage is evaluated, if the claim is valid and within the policy’s coverage limits, the insurance company will pay for the repairs up to the policy’s highest coverage amount. This coverage makes sure that the car owner gets paid for the damage the accident caused, so they can fix up their car without having to pay for everything themselves.