indemnify (2024)

FAQs

What does it mean to indemnify someone? ›

To indemnify, also known as indemnity or indemnification, means compensating a person for damages or losses they have incurred or will incur related to a specified accident, incident, or event.

To “indemnify” means to pay or compensate the other party for its legal liabilities or losses.

to pay or promise to pay someone an amount of money if they suffer damage or loss: indemnify someone against something In return for a premium, the underwriter agrees to indemnify the insured against losses covered by the insurance.

Definition: An indemnifier is someone who promises to protect or compensate another person if they suffer any loss or damage. It is also known as an indemnitor. Example: If you rent a car, the rental company may require you to have an indemnifier who will pay for any damages to the car while it is in your possession.

If you are negotiating commercial contracts on behalf of your business, consider including an indemnity clause in them. An indemnity clause creates an obligation for the indemnifier to cover the losses incurred by the indemnified party. The amount of loss will depend on how limited the indemnity clause is.

The concept of indemnification imposes an obligation on one party, the indemnitor, to pay or reimburse another party, the indemnitee, for losses covered in the indemnification provision. The obligation to reimburse or pay arises when an actual loss or liability has occurred.

There's nothing inherently wrong with having an indemnity that can apply to claims between the parties—if that's what the parties intend. But if the parties want the indemnity to apply only to third-party claims, they can say so in the contract.

Indemnification is protection against loss or damage. When a contract is breached, the parties look to its indemnity clause to determine the compensation due to the aggrieved party by the nonperformer. The point is to restore the damaged party to where they would have been if not for the nonperformance.

For example, in the case of home insurance, the homeowner pays insurance premiums to the insurance company in exchange for the assurance that the homeowner will be indemnified if the house sustains damage from fire, natural disasters, or other perils specified in the insurance agreement.

It's a legally binding promise to protect another person against loss from an event or series of events: they are indemnified and protected from liability. Sometimes, indemnities are implied into the terms of contracts automatically, due to the nature of the legal relationship between the two parties.

What does indemnity cover? ›

Indemnity insurance is a type of insurance policy where the insurance company guarantees compensation for losses or damages sustained by a policyholder. Indemnity insurance is designed to protect professionals and business owners when found to be at fault for a specific event such as misjudgment.

: to insure or protect against loss, damage, or injury. 2. : to give something in order to make up for loss, damage, or injury. indemnify victims of a disaster.

The obligation to indemnify requires the indemnifying party to: Reimburse the indemnified party for its paid costs and expenses, referred to as losses. Advance payment to the indemnified party for its unpaid costs and expenses, such as: Liabilities. Claims.

In practice, a hold harmless and an indemnity are functionally equivalent in that both require a party to assume responsibility for losses incurred by another party in connection with certain acts and circ*mstances. Some argue that while an indemnity shifts losses, a hold harmless shifts both losses and liability.

The indemnification clause is a crucial element in commercial contracts as it helps mitigate the risks and consequences associated with potential breaches of contracts. This clause also ensures that the parties are fairly compensated for their losses and helps maintain a stable and predictable business relationship.

An indemnity insurance policy covers a legal defect with the property that either can't be resolved or would be very costly and/or time consuming to do so. So, instead of trying to fix the problem, you simply take out the insurance to protect you against an expensive bill in the future.