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Indemnity Insurance

Trading Term

Indemnity insurance reimburses documented losses up to policy limits following a claims adjustment process, and it is the familiar form of most property coverage. Because payouts track actual damage, basis risk is low, but settlement requires inspection, documentation, and sometimes negotiation, which can delay payment for months or years after a major event when adjusters are overwhelmed. Deductibles, sub-limits, and coverage exclusions determine what portion of a loss is ultimately recovered.

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