Indemnity Effect

• Is the estimated indemnity and/or difference between the current market prices and the insured Class/Component prices.
• Indemnity Effect = (Insured Price - Last Settlement Price) x Effective Pounds Insured.

Example

Class III Insured Price: $13.90
Class III Last Settlement Price: $14.25
Effective pounds insured: 9,000,000 lbs. (90,000 cwt's)
$14.25 - $13.90 = -0.35/cwt
-0.35/cwt * 90,000 cwt's = -$31,500.00 (Indemnity Effect) - meaning the endorsement is $31,500 away from a payout