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Indemnity Insurance

What Is Indemnity Insurance?

Indemnity insurance is a supplemental type of liability insurance that pays for damages or losses resulting from the policyholder’s negligence or failure to deliver services

An indemnity agreement means that your insurance company agrees to pay for potential losses or damages on your behalf. 

Also called “professional indemnity,” this type of liability insurance includes coverage options like:

Indemnity Insurance definition.

What Does Indemnity Insurance Cover?

Indemnity insurance specifically covers claims involving goods or services. This can include claims involving your food products, your consulting or training services, or even your handling of sensitive digital data. 

For example, if you teach a cooking class and a client says they didn’t get the promised results, they could sue you for damages. With insurance indemnity, those legal claims or financial losses would be covered for your business. 

Your professional indemnity policy can cover expenses like medical bills, repair expenses, court costs, and settlements.

What Does Indemnity Insurance Not Cover?

Claims covered by your general liability policy, such as third-person bodily injury or property damage, are not covered by indemnity insurance. 

Always review your policy for your specific coverage and exclusions.

How Does Indemnity Insurance Work?

When you purchase a liability policy, your insurance company agrees to pay for covered losses that you may become legally obligated to pay. The company will “indemnify,” or financially protect, another party on your behalf per the policy terms and limits. 

Who Needs Indemnity Insurance?

Any individual or business that provides services or sells a product should have indemnity insurance.

If a client makes a claim against your business, you could owe thousands of dollars. Your policy can absorb that cost so you don’t have to pay out-of-pocket.

How Much Is Indemnity Insurance?

Our basic general liability policy starts at $299 a year, or $25.92 a month.

The final cost of your indemnity insurance is based on several factors, including:

  • Business operations
  • Location of your business
  • Gross annual sales
  • Policy limits
  • Products manufactured or sold
  • Optional coverage added


Product liability insurance is included in your premium, but you may also need professional liability, which costs an additional $10.42 per month, and cyber liability, which is $8.25 per month.

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