Definition of indemnity

The term "indemnity" can be traced back to the Middle Ages, where it was initially used in a legal context related to the compensation of damages. The word "indemnity" comes from the Latin term "in-" (meaning "not") and "demnus" (meaning "compensated"). In its original form, indemnity referred to the act of absolving a person from any further liability for damages. This concept was typically applied when an individual was found not guilty of a crime or when someone was released from a legal obligation. Over time, the use of indemnity expanded to include financial compensation for losses, damages, or injuries sustained by an individual or entity. In the context of insurance, indemnity refers to the amount of money paid by an insurer to a policyholder to cover losses incurred due to a covered event. In summary, the origin of the word "indemnity" can be traced back to its Latin roots, where it referred to the concept of absolving someone from liability or compensating them for damages. Its current use in insurance refers to the payment made by an insurer to a policyholder for losses incurred due to a covered event.