DEFINITION of 'Period Of Indemnity'

The length of time for which benefits are payable under an insurance policy. Also used to denote the time period for which indemnity or compensation is payable under a business interruption policy. The period of indemnity is usually the most critical component of quantifying the business interruption loss.

BREAKING DOWN 'Period Of Indemnity'

For example, if a disability policy provides for six months of income in the event of an accident, the period of indemnity would be six months. An extended period of indemnity endorsement in a business interruption policy provides insurance coverage for loss of income for a specified period after the damaged property has been repaired and business has reopened.

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