The Difference Between Indemnities and Insurance

The purpose of indemnities and insurances is to protect any type of financial loss. Most people don’t understand the difference between these two terms. It is important for managers to understand the difference between these terms to better protect their businesses.


Indemnities are utilized in financial contracts to divide risk among the contracting parties. Normally, it is done by making changes in the statutory rights of the parties, with one or two parties agreeing that majority of the losses that the other party may face in a specific period will be compensated by them. Normally there are up to 6 types of indemnity clauses. For Medical Indemnity Insurance, visit a site like MPRS, providers of Medical Indemnity Insurance.

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The first type of clause is limited to indemnities. In this type of indemnities, an organization indemnifies the supplier to cover all types of losses with the exception of the cases where the loss is a result of the supplier’s own mistakes. In bare indemnities, an organization indemnifies for all types of liabilities due to specific events without any limitations. In the third part of indemnities, an organization provides cover against loss due to claims made by a third party.


Most people have a good understanding of insurance compared to indemnity. In an insurance policy, risk or loss from one party is transferred to another in return for payment. An insurance policy protects the insured party against any type of loss specified in the terms of the insurance policy. In short, both the indemnities and insurance protection against financial losses but with different terms and ways.

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