What Is an Indemnity Benefit Contract?
An indemnity benefit contract simply states that one party agrees to pay another party when a loss occurs, such as an insurance contract. Understand how an indemnity benefit contract applies to different situations with information from a representative in this free video on insurance.
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This is John Pinelli, financial representative, talking to you today about indemnity benefit contract. Now, an indemnity benefit contract is essentially an insurance contract where one party agrees to pay another party when a loss occurs. So, when that loss occurs by party A, party B has an agreement to come in and indemnify or reimburse party A for that loss when it occurs. So, an indemnity benefit contract is essentially an insurance contract, although it doesn't always have to pass through an insurance company. For example, my friend is about to leave my house and he says hey John, can I borrow your car? And I say, oh I don't know, and he says, well, if I damage your car I'll agree to pay for all the damages. So, that would be an example of an indemnity benefit contract where he has agreed to potentially pay the losses or damage to my car if he were to damage it, so he's engaged in an indemnity benefit contract, and in that case, if the car was damaged I would be indemnified or paid, reimbursed for that damage that had occurred.