01 / The meaning
What it means.
The indemnity principle broadly aims to address loss rather than provide a profit from the insured event. However, policies use different settlement bases, including replacement or agreed-value arrangements, and not every insurance benefit is calculated as reimbursement of actual loss. Limits, excesses and valuation provisions determine how the principle operates in a particular contract.
An indemnity in a commercial contract is a separate promise between parties. It may require one business to reimburse another for specified losses, potentially more broadly than the business’s insurance responds. Likewise, an insurer confirming indemnity for a claim should be read in light of any stated qualifications and limits. Clarify which meaning is intended before comparing a lease clause, liability demand and property settlement calculation.
02 / Put it in context
A practical example.
Hypothetical example: a tenant agrees to indemnify a landlord for certain damage. When damage occurs, the lease obligation and the tenant’s liability insurance are assessed separately because the contractual promise does not itself establish policy cover.
This example illustrates the term. It does not predict a claim outcome.
03 / Read the detail
What to check.
- Identify whether indemnity refers to insurance or a separate contract.
- Check settlement basis, insured liability, limits and excesses.
- Read qualifications in any insurer confirmation of claim indemnity.
04 / Start a useful conversation
A question for your broker.
What loss or liability is being indemnified, and under which document and limits?
05 / Connect the terms
Keep the meaning in context.
06 / Apply it to your business
Related insurance guides.
Further reading
Read the source guidance alongside the relevant policy wording.
General information only. This does not take into account your objectives, financial situation or needs. Before acting, consider whether the information is appropriate for you. Cover is subject to insurer acceptance and the policy terms, conditions, limits and exclusions. Read the Financial Services Guide and the relevant PDS (where applicable) and/or policy wording before deciding.
Let’s start with your business
A clearer conversation
about your insurance.
Tell us what you do, what has changed and what you need to understand.