What is contract liability insurance and indemnity insurance?
In many cases when you come in into a contract, whether it is a contract for work, a lease agreement or any other type of contract, there will be clauses covering insurance and indemnification, which is a fancy word for covering someone else’s financial loss.
Liability insurance provides money to cover losses to others due to negligence on the part of the insured. In this case, the insurance company is indemnifying the insured.
If there is an indemnification clause in the contract then the contractor must indemnify the contractee as specified. This is most usually done by adding the contractee as either an extra insured (in the case of liability insurance) or as a loss payee (in the case of property insurance) to their existing policy.
If the person coming in the contract does not have insurance or does not have sufficient insurance, then those policies can usually be purchased. However, having the insurance or having the contractee named on your policy does not alleviate the indemnification.
Why do insurers need largest contract fee figures in Professional Indemnity Insurance?
These fees are the result of Regulatory structures, Unlike most insdustries, The insurance Industry has rigorous thresholds on what actual and projected operating and capital expenses may be considered when determining premium rate structures. Every rate switch or adjustment is sucject to a government approval process. Obtaining approval for rate switches is not a petite affair, especially if your having to do it often in order to compensate for puny fluctations in a labor market or other operating expense. Fees can be decreased or enhanced at any time without a government rate approval to compensate for operational expenses. .
In Addition, all funds received listed as premium payments are required to go into trust holding accounts to pay out future claims, These funds are not available to the company for daily operating expenses. Profits. if any, from these trusts accounts can only be realized according to the regulations set forward by each state. The Insurance Industry as a entire is one of the most regulated industries on the planet..
As a result of regulatory structures as described above. it is not feesable to attempt to incorporate every conceivable projected expense into the underlying rate structure. Fees are resultingly high, When Insurance companies lose money sometimes for several years due to big losses on premium claims, the fees may be the only actual profit the insurance company got.
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insured is entitled to recover the actual commercial value of what he has lost.
through the happening of the insured event, be such event harm to property,.
fire, theft, public liability or marine insurance..
In non-indemnity insurance the sum which the insured is entitled to receive from.
the insurer does not necessarily bear any relation to the actual loss, if any,.
suffered by the insured. Life insurance contracts, individual accident and.
sickness insurance are examples of non-indemnity insurance..
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