What is Indemnity Insurance?

Indemnity Insurance is a broad category of insurance designed to compensate you for covered losses and restore you to your financial position before the loss occurred.

What You Need to Know

Most business insurance is indemnity insurance—the goal is to make you financially whole after a loss, not to profit from it. You’re reimbursed for actual losses up to policy limits.

Why It Matters for Restaurant Owners

Understanding the indemnity principle helps you set appropriate coverage limits and understand claim payouts. You can’t insure your $50,000 oven for $100,000 and profit from a loss—insurers will only pay actual replacement cost or repair value.

Accurate Valuations Are Critical:

This principle also means accurate property valuations are critical—undervaluing assets means insufficient claim payments, while overvaluing them wastes premium dollars.