An Indemnity policy is an agreement mostly in property insurance by one party (the insurer) to make good a loss sustained by the other party (the insured). The principle ensures that the person who actually suffers the loss receives no more and no less than the value of the loss.
Once a policyholder suffers a loss as a matter of urgency, the following actions must be taken
Notify the insurance company at the earliest. The policy wording would usually stipulate that the insurer is notified of any incident which could give rise to a claim even if the insured does not intend to lodge a claim. This allows insurers or their representatives commence investigation into the loss in good time.
Late notification diminishes the possibility of insurers making any recovery from any negligent party and may result in the relevant claim substantiating document being lost.
Terms of an insurance contract would also state that the insured is to provide proof of loss and produce relevant documents to back up a claim (where possible). It would be unreasonable for instance for an insurer to request evidence from a policyholder who has just lost everything in an inferno.
An insured is also expected to cooperate fully with an insurer or their appointed representative after a loss. Though most insurers aim to settle a claim speedily, as custodians of the insurance fund on behalf of all policy holders, they are entitled to investigate every reported loss thoroughly.
The policyholder is expected (where possible) to safeguard the property after a loss. Where the safeguarding of property would expose the insured or anyone else to danger of any kind, common sense should prevail.
When the claim processing is complete, under indemnity policies insurers can opt to settle the claim in four different ways
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