what is the rule of indemnity in insurance 
with indemnity insurance one party commits to compensate another for prospective loss or damage in insurance policies in exchange for premiums paid by the insured to the insurer the insurer offers to compensate the insured for any potential damage or losses the bottom lineindemnity is a type of insurance compensation paid for damage or loss when the term is used in the legal sense it also may refer to an exemption from liability for damage indemnity is a contractual agreement between two parties in which one party agrees to pay for potential losses or damage caused by another party typically an insurance contract dictates that the insurer also known as the indemnitor agrees to compensate the other party involved the insured or the indemnitee for any damage or losses in return for premiums paid by the insured 