When it comes to insurance policies, a double indemnity agreement is an important term to understand. It refers to an insurance policy clause that doubles the payout for accidental death or dismemberment of the policyholder.

In simpler terms, if a policyholder dies or loses a limb due to an accident, the insurance company will pay out double the amount of the policy. For example, if the policy`s face value is $100,000, the payout in the event of an accidental death would be $200,000.

The term “double indemnity” comes from the practice of insurance companies offering a second policy, or “indemnity,” to cover accidental death or dismemberment on top of the original policy. Nowadays, the double indemnity clause is often included in the original policy and not offered as a separate policy.

It`s important to note that the double indemnity clause only applies to accidental death or dismemberment. If the policyholder dies of natural causes or illness, the payout will be the face value of the policy. Additionally, the policyholder must have died within a specific timeframe after the accident, usually within 90 days.

Double indemnity agreements are often found in life insurance policies, but can also be included in other types of insurance policies, such as travel insurance or accidental death and dismemberment insurance.

Understanding the meaning of double indemnity agreements can help policyholders make informed decisions when it comes to choosing and purchasing insurance policies. It`s important to read the fine print and fully understand what is and isn`t covered under the policy to ensure peace of mind in the event of an unexpected accident.