What does the term indemnity mean?

What does the term indemnity mean?

Indemnity is a commonly used term in the Insurance Industry. We see Limits of Indemnty being used as another term for sum insured.

The terms liability and indemnity need to be used in context with the areas of risk you are concerned about. If we start with their definitions:

·         Indemnity – means putting you back in the same position after a loss as you were prior to a loss.

·         Liability – means the amount you are legally responsible to pay for a resultant loss.


You could virtually say they mean they are interchangeable when it comes to insurance. However, these terms are really about how a policy is meant to respond. However, we use these terms to describe certain types of policies ie Public Liability, Products Liability and Professional Indemnity. All of which are there to respond to certain types of third party claims made against us when we carry out the work.