Definition extracted with permission from American Academy of Family Physicians: Family Physicians and Managed Care
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indemnity Insurance
Indemnity insurance typically means coverage offered by insurance companies and Blue Cross plans, whereby individual persons insured are indemnified through reimbursement by the carriers for their medical expenses. Payments may be made to the individual incurring the expense, or in many cases, directly to providers. The important point is that the indemnity relates only to a specific loss incurred by the insured person after the fact.