Is indemnity insurance popular?

Yes, indemnity insurance is popular, though its popularity depends heavily on whether you mean professional indemnity (Errors and Omissions insurance) or fixed/hospital indemnity (supplemental health insurance).

1. Professional Indemnity Insurance (Very Popular)

• Who uses it: Doctors, lawyers, financial advisors, consultants, architects, contractors, and other service providers.
• Why it is popular: It is often legally mandatory for licensed professionals or required by clients before signing a contract. According to the Business.com Indemnity Insurance Guide, it provides crucial financial protection against lawsuits, errors, omissions, or negligence claims.

2. Hospital / Fixed Indemnity Health Insurance (Growing in Popularity)

• Who uses it: Employees opting into voluntary workplace benefits or people pairing coverage with High Deductible Health Plans (HDHPs).
• Why it is popular: As primary health insurance deductibles and out-of-pocket costs rise, many people buy supplemental hospital indemnity insurance—which pays a fixed lump-sum cash benefit per day or event if you are hospitalized—to help cover unexpected out-of-pocket bills. As noted by Guardian Life, it is frequently offered as a low-cost, guaranteed-issue voluntary benefit through employers.

3. Traditional / Primary Indemnity Health Plans (Not Popular)

• What they are: Old-school fee-for-service primary health insurance where the insurer pays a percentage of customary and reasonable charges.
• Current status: They are rare today. According to Healthinsurance.org, traditional primary indemnity health plans accounted for just 1% of employer-sponsored health insurance enrollment.

Allstate frequently tops lists from legal experts, consumer advocates, and industry surveys as having one of the worst reputations in the insurance industry.

Commonly Cited Companies with Poor Reputations

Legal professionals and customer satisfaction rankings (such as J.D. Power's Property Claims survey data) frequently single out a few major carriers for slow payouts, low settlement offers, or high complaint volumes:

• Allstate: Often ranked number one on lists of worst insurers due to aggressive "deny, delay, defend" tactics, heavy reliance on internal software to undervalue claims, and low customer satisfaction scores in property claims.
• Liberty Mutual: Frequently criticized by personal injury lawyers and policyholders for low auto and home settlement offers, high rates of claim disputes, and frequent policy non-renewals.
• State Farm: Nationally recognized for using strict denial or delay tactics, particularly misclassifying wind or flood damage on property claims to avoid payouts.
• Unum: Noted primarily in disability insurance for a long-standing reputation of unfairly delaying or denying valid long-term claims.
• Farmers Insurance: Criticized for incentivizing adjusters to meet low payout goals and utilizing restrictive policy adjustments.

Why These Reputations Exist

• Deny, Delay, Defend: Insurers sometimes use internal software calculators to slash medical or property repair estimates far below actual market costs.
• Profit Incentives: Critics and lawsuits have alleged that certain large carriers tie adjuster bonuses or performance metrics to minimizing payout totals.
• Market Withdrawals: Massive rate hikes and sudden policy cancellations in high-risk disaster states (like California and Florida) have sharply damaged public perception for carriers like Allstate, State Farm, and Farmers.

Indemnity insurance is very common during UK property transactions and conveyancing, routinely used to resolve minor legal defects or missing paperwork without delaying a sale.

How Common Is It?

• Standard Conveyancing Practice: It is a regular tool used by solicitors when minor issues arise, such as missing building regulations, lack of planning permission for old alterations, or breaches of restrictive covenants.
• Public Perception: Opinions on Reddit's r/HousingUK are mixed opinions; some buyers and sellers view it as a cheap and fast way to get peace of mind, while others consider it a low-risk, bureaucratic formality driven by solicitors and lenders.
• Rarely Claimed: Actual claims made on these property indemnity policies are extremely rare, as they primarily guard against improbable future enforcement actions.

Key Details of Property Indemnity Policies

• Cost: Usually a one-off payment ranging from £20 to £300, depending on the property value and risk.
• Who Pays: Typically paid for by the seller to keep the house sale moving forward.
• Lifespan: The policy lasts for the lifetime of the property and transfers automatically to future owners.
• Main Rule: You usually invalidate the policy if you actively bring the defect to the attention of a third party (like the local council) after buying.

One major drawback of indemnity plans is that they pay a fixed, preset cash amount per service rather than covering a percentage of your total medical costs, which can leave you with massive out-of-pocket bills if your actual expenses are higher.

Key Drawbacks of Indemnity Plans

• Capped Payouts: Fixed payouts often fall short of real medical charges, meaning you must pay the rest of the bill yourself.
• Upfront Payments: Many plans require you to pay cash upfront for medical or dental services and wait for reimbursement.
• Exclusions and Limits: They often exclude preventive care, pre-existing conditions, or chronic treatments.
• Not Full Insurance: They are designed as supplemental coverage and do not meet the standards of comprehensive health insurance.

Whether indemnity insurance is worth getting depends entirely on whether you mean professional indemnity insurance (for work errors) or hospital indemnity insurance (supplemental health coverage).

Because "indemnity insurance" refers to two very different products, here is how to decide if each type is worth the cost.

1. Professional Indemnity Insurance (Errors & Omissions)

This protects businesses and professionals (like doctors, lawyers, consultants, or contractors) if a client sues you for a mistake, oversight, or negligence that caused them financial or physical harm.

• Is it worth it? Yes, if your work involves advice, design, or professional services.
• Why it's worth it: A single client lawsuit can cost tens of thousands of dollars in legal fees and settlements, which can bankrupt a small business or independent freelancer.
• When you don't need it: If you do manual labor covered by general liability, or if your job carries zero risk of a client claiming financial loss due to your error, you may not need it. However, many clients explicitly require proof of professional indemnity insurance before signing a contract.

2. Hospital Indemnity Insurance (Supplemental Health)

This is a fixed-benefit insurance plan that pays you direct cash if you are admitted to the hospital or have a major medical event. It does not replace traditional health insurance.

• Is it worth it? It depends on your primary health plan and budget.
• Why it might be worth it: If you have a high-deductible health plan (HDHP), a hospital indemnity policy can provide quick cash to help pay down high out-of-pocket deductibles if you experience an unexpected accident, sudden illness, or child birth. They are also typically very inexpensive (especially when bought as a group benefit through an employer).
• Why it might NOT be worth it: These plans come with strict limitations, caps on payout days, waiting periods, and exclusions for pre-existing conditions. A high-deductible health plan combined with a Health Savings Account (HSA) is often a better financial shield than a standalone indemnity plan.