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How do I Choose the Best Indemnity Policy?

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  • Written By: M. Lupica
  • Edited By: John Allen
  • Last Modified Date: 05 November 2016
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    Conjecture Corporation
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There are a lot of factors one must consider when choosing the best indemnity policy. Indemnity insurance plans pay up to a certain amount on a particular type of cost incurred that is covered by the policy. In picking an indemnity policy, the policy holder — called the indemnor — must make sure the type of coverage he or she receives fits well within the type of risk he or she is seeking to minimize. Monthly cost relative to the potential award as well as the breadth of coverage should also be considered. Additionally, because the insurance industry is one that requires special knowledge to truly understand, it is best to research your potential insurance provider before signing on to an indemnity policy.

Paramount to picking the right indemnity policy is making sure the policy covers every risk you are seeking to minimize. Indemnity policies usually cover particular circumstances that are enumerated within the fine print of the policy. For this reason, it is incredibly important that you read the actual language contained within the policy and ask questions to ensure you understand what types of costs the policy covers. For example, if you are an attorney, it is important to make sure the policy you choose covers all instances of malpractice in the area of law in which you practice.

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Cost is always a factor when considering insurance. In particular, you have to consider the cost relative to the policy’s payout limit as the indemnity policy will only cover up to a certain amount. Any liability over that ceiling will be your responsibility to pay out of pocket. In addition to the payout limit, you want to consider the scope of the policy — i.e., how broad the coverage is in terms of the type of costs the indemnity policy covers. It is best to get a sense of what the best deals are in the particular type of coverage you seek by contacting several companies and comparing the quotes you receive.

Finally, because complete understanding of an insurance policy requires specialized knowledge, there are many different, freely available sources for rating everything about each particular company, from value to customer service. The purpose of such groups is to maintain public oversight of insurance companies that is accessible to the average person. Therefore, the information is typically presented in a way that will best suit your purposes as a potential policy holder. It is important that you do your due diligence on the company you choose to furnish your indemnity policy because a lack of understanding prior to signing onto a policy can be costly in the future.

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