To Indemnify…

We insurance agents use a lot of fancy words.

Let’s take the mystery out of one of them today.

Indemnify (the verb) or indemnification (the noun).

Basically, it means to ‘make right’ or to ‘recompense’.

An insurance company might indemnify you by trying to replace what you lost. If your car gets damaged, the insurance company indemnifies you by repairing the damage.

If you are negligent and have to pay damages to an injured party, an insurance company indemnifies you by providing the funds to pay those damages.

The principle of indemnification requires that you do not gain by being indemnified. You are made right or put back into the situation you were in prior to the incident occurring.

Does that make sense? Just look at it this way: You shouldn’t make money on insurance, but you should be put back to where you were prior to the incident happening (of course you will have had a headache or two – metaphorically and literally).

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