Indemnification

Building Blocks of an Indemnification Clause. Typical indemnification provisions will be long sentences with many clauses, legal-sounding words, and long lists of specific details. Insurance Implications and Other Contractual Matters. Other Technical Elements of an Indemnification Provision. Takeaway.

A typical example is an insurance company wherein the insurer or indemnitor agrees to compensate the insured or indemnitee for any damages or losses he/she may incur during a period of time.

Indemnification clauses are clauses in contracts that set out to protect one party from liability if a third-party or third entity is harmed in any way. It's a clause that contractually obligates one party to compensate another party for losses or damages that have occurred or could occur in the future.

Indemnification provisions are generally enforceable. There are certain exceptions however. Indemnifications that require a party to indemnify another party for any claim irrespective of fault ('broad form' or 'no fault' indemnities) generally have been found to violate public policy.

An indemnity contract is a legal arrangement between two parties in which one party agrees to pay another party for a loss or harm that meets certain requirements and conditions unless other circumstances are specified.

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.

An indemnification is a contractual obligation by one party (indemnitor) to pay or compensate for the losses, damages or liabilities incurred by another party to the contract (indemnitee) or by a third party.

You should look to limit indemnification clauses by narrowing their scope, putting in caps on damages, and clearly defining the indemnifiable acts (i.e. the representations and warranties in the example above). Also consider purchasing insurance as a means to limit your financial risk.

A government agency may not indemnify its contractors for claims brought against them by reason of their own negligence. Nor may the United States agree in advance to assume liability for the negligence of its employees for which it may not otherwise be responsible under the Federal Tort Claims Act.