INDEMNITY

DEFINITION:

Financial compensation sufficient to place the insured in the same financial position after a loss.

BENEFIT POLICY:

There are some policies that provide FIXED benefits, known as benefit policies, mainly for sickness and accident. 

Insurers do try to take account of an individual's circumstances and earnings, when agreeing to insure weekly benefits for temp disablment. They don't want the insured to use it as an incentive to take time off work.

OPTIONS AVAILABLE:

1. Cash pament: mostly the case, esp for commercial insurances. However, there is growth for replacements. Many insurance companies now have close relationships with retailers and the insurer's bulk buying pwoer means they get discount, usually 20%. 

If the insured doesn't want a replacement. They will only be entitled to how much they would have paid the retailer.

However, FCA = policyholder can choose where they purchase this and can have cash if they can not find an acceptable replacement. 

2. Repair: most common in motor. 

3. Replacement: most common in glass. i.e. shop front windows. The discounts insurers receive means lower claims costs and can prevent last minute fraudulent claims, because most cases they will be looking for easy cash. 

4. Reinstatement: i.e. restore a building that has been damaged by an insured peril. 

APPLICATION OF INDEMNITY:

1. Property insurance: completely destroyed = replaced, partially = repaired. 

2. Liability iinsurance: legal liability to pay damages and…