Contents insurance (older items)
If a five-year-old laptop is stolen, an indemnity settlement may reflect the laptop’s current value, not the cost of a brand-new equivalent model.
Glossary • Definition
What does “indemnity” mean in insurance?
Indemnity means the insurer aims to put you back in a similar financial position to where you were before the loss — not to improve your position or leave you better off (subject to policy terms).
- âś” What indemnity means
- âś” Real-world examples
- âś” What to check in policies
In simple terms
If you own something that is damaged or stolen, an indemnity-based policy aims to compensate you for the value of that loss — often taking into account the item’s age, wear and tear, and market value.
- Indemnity is common in general insurance (car, home, contents)
- It often relates to “market value” or “like for like” replacement rules
- Policy wording and settlement method matter
Examples of indemnity in practice
These examples are illustrative — insurers use different methods and terms.
Car insurance (write-offs)
If a car is written off, insurers often settle based on the car’s market value immediately before the incident, rather than the price of a brand-new replacement.
Home insurance (repairs)
The insurer may fund repairs to return the property to a similar condition. The approach can vary depending on the claim type and policy terms.
Excess still applies
Even if the insurer settles a claim, you may still need to pay the policy excess (depending on the claim).
Excess explained →Indemnity vs “new-for-old” cover
Some policies offer replacement-style cover, but it’s not always standard.
What to look for
Some contents policies provide “new-for-old” replacement for certain items. Others are strictly indemnity-based. Always check whether the policy promises replacement, repair, cash settlement, or vouchers.
Home & contents guides →- Does the policy state “new-for-old” replacement?
- Are there limits for high-value items (jewellery, tech)?
- Is settlement cash, repair, replacement, or vouchers?
- Are depreciation rules stated for certain items?
- Do you need to provide receipts or proof of ownership?
Where indemnity matters most
You’ll usually see indemnity language in general insurance policies and claims processes.
Car insurance claims
Settlement can depend on market value and repair costs.
Start comparison →Home & contents policies
Look for settlement methods, limits and underinsurance rules.
Read home guides →Underinsurance
Claims can be reduced if sums insured are too low (policy-dependent).
Underinsurance guide →Browse providers
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