What is Meant by an Indemnity Period in an Insurance Claim?

Insurance is a contract of Indemnity. Under the insurance contract, the insurer agrees to compensate for the loss that you are covered for in the policy in return for regular payments known as ‘premium’. Thus the insurer indemnifies you and provides you financial protection after you incur a loss.

But the insurer indemnifies or protects you only for a specific period which you agree upon. This is known as the indemnity period.

Thus the indemnity period is the period for which insurance cover is legally bound to accept the claims. It is the duration in which claims will be payable to you or your business. Thus claims which are made outside of this period are not entertained by the insurance companies.

When does Indemnity Period Start?

The start time will depend on the policy, in some policies indemnity period can start right away, while for some it starts after a specific period.

Let's make this clear with an example

Raj buys a policy on 10th Nov 2021 to cover his goods between 5th Dec 2021 and 5th Jan 2022. Thus, even though you have bought a policy on 10th Nov your indemnity period does not start until 5th Dec.

What Happens if the Loss is Discovered after the Indemnity Period?

At times it may also happen that the loss is discovered at a later date but has been caused by an event within the indemnity period. For example, due to leakage, water broke out and damaged your goods. But some more damaged goods are found later.

In this case, as well, the insurer will have to admit the claim.