Definition
Indemnity (apozimiosi)
Indemnity is the amount the insurer pays for a covered loss, and the principle behind it: insurance restores you to the financial position you were in before the loss — not a better one. The amount reflects the actual loss, within the limits and after any deductible or co-payment. You do not profit from a claim.
Also known as: Principle of indemnity
The principle of indemnity explains why a payout does not always equal the amount you claim. The insurer works out your actual loss, subtracts the deductible and any co-payment, and applies the cover's limits and sublimits. If you are underinsured, it can be reduced further, proportionally.
There are exceptions: some life and personal-accident policies pay a pre-agreed sum regardless of the 'actual loss', because a life or a limb is not valued like an asset. In property and liability insurance, though, indemnity is the rule.
In your own policy, look at how the basis of settlement is defined per cover — «replacement value», «current value», with a deductible or co-payment. These decide how much you receive in practice. If anything is unclear before a loss, ask your insurer or advisor.
Upload your policy — free analysisFrequently asked questions
Why is my payout smaller than my loss?
Usually because of a deductible, co-payment, limits or underinsurance, or because the cover values the current rather than the new price. Your policy terms explain the basis.
Can I profit from an insurance claim?
In property and liability insurance, no — the principle of indemnity rules it out. Some life/accident policies pay a pre-agreed sum, which follows a different logic.
Related
Educational content, not insurance advice. PolicyWallet explains what the term means and helps you find it in your own document — it does not assert what your policy covers.