What Is Indemnity (Indemnification)?
Indemnity, also called indemnification, is a contractual promise by one party to cover another party’s losses, costs, or liabilities. It runs through insurance and commercial contracts of every kind, from construction agreements and commercial leases to vendor, service, and professional contracts. The key question is always scope: how far the promise reaches, and whether that exposure is insurable.
A narrow, negligence-based indemnity, covering losses you actually caused, generally lines up with what liability insurance will pay. A broad-form indemnity that also assumes the other party’s negligence, adds a duty to defend, or reaches losses unrelated to your fault can create exposure your policy will not follow, because insurance responds to the liability you would have had without the contract. Have a lawyer review the wording and your broker confirm what is covered. For a worked example in an engineering context, see our engineering contract review guide.
Questions about Indemnity (Indemnification)?
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