Indemnity

Definition

Indemnity is a contractual obligation where one party promises to hold another party harmless from any losses, damages, or liabilities arising from specific situations or events.

Purpose

Indemnity clauses are used to manage risk and provide financial protection, ensuring that one party is compensated for losses or damages caused by the other party's actions or negligence.

Examples of Use

• A contractor indemnifying a property owner against claims arising from construction work.
• An insurance policy indemnifying the policyholder against losses from covered events.
• A tenant indemnifying a landlord against damages caused by the tenant's actions on the rental property.

Related Terms

• Hold Harmless Agreement: A provision in a contract that prevents one party from being held responsible for certain damages or losses.
• Liability Insurance: Insurance that provides protection against claims resulting from injuries and damage to people and/or property.
• Risk Management: The identification, assessment, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.

Notes

Indemnity agreements must be clearly defined and understood by all parties to ensure that the scope and limitations of the indemnity are agreed upon and enforceable.