What do the termsindemnityandsubrogation mean in the context of insurance policies?

Question

What will be an ideal response?

Answer 1

The term indemnity refers to a duty to make good on any loss, damage, or liability claims incurred by another. The term is used frequently in insurance law and insurance contracts because it involves the duty to compensate for loss. Under the principle of indemnity, indemnified parties are restored to the financial position that they were in before the loss or accident. Indemnity clauses are frequently found in rental contracts. Because indemnity clauses protect specified parties from suffering financial loss due to lawsuits, they are sometimes referred to as hold-harmless clauses. Corporations often indemnify their directors and officers for any legal costs and fees that they might incur if they become involved in lawsuits by virtue of their positions.In simple terms, subrogation is the right to pursue another party's claim. In insurance, sub rogation deals with the right of the insurer to be put in the position to pursue claims on behalf of the insured. If the insurance company has compensated the insured for a loss sustained, and then later receives recovery from a third party in the name of the insured, the company can ask a court to order reimbursement from the proceeds. Most insurance contracts contain explicit subrogation clauses, which often require the insured party to cooperate with the insurance company by providing documents, records, and whatever else is necessary for the company to pursue claims on behalf of the insured. Even if the contract does not contain a sub rogation clause or does not use the word subrogation, however, courts often hold that insurance companies have a right to sub rogation unless this right is explicitly waived.