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Indemnity Agreement

2 signers
1Indemnifier
2Indemnitee
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Check This Sample Indemnity Agreement

Engagements with other companies or individuals can put a company at risk of monetary losses. An indemnity agreement may assist you in protecting yourself from liability due to a contract violation committed by another party. In this sample agreement, the indemnifier agrees to indemnify the indemnitee for any losses, damages, or expenses incurred in a breach of contract.
Indemnity agreement sample template

An indemnity agreement prevents your partners or customers from taking action against you based on your actions. These agreements provide you with the necessary rights and protections to mitigate potential risks in business dealings and partnerships.

This sample indemnity agreement includes provisions for indemnification, limitations of liability, and many other important terms.

Almost all businesses have indemnity agreements. This template is a great starting point, but you may want to consult a lawyer to ensure that the agreement fully protects your interests.

Business lawyers who represent business owners who want protection under indemnification agreements may be able to advise you on how you should proceed with your claim and whether the agreement will protect the business’s financial stability.

How Indemnity Agreements Work

Similarly, as with most contract law and business contracts, an indemnity agreement contains essential guidance and provisions to inform the contract principal of the obligations they have. The absence of critical terms could cause a document that does not provide the required protection for a business.

Make sure to prepare a thorough agreement to prevent any problems with the future. When someone asks for indemnification, make sure to tell them what they expect from you. If necessary, consult your solicitor before signing a contract.

Before entering into such business agreements, ensure that you fully understand the potential risks and protect yourself with an indemnity agreement. Download this sample agreement and customize it to fit your specific needs.

What to Expect in an Indemnity Agreement

Indemnifications are compensations from the loss suffered. It generally means that there is an obligation to compensate for the losses caused and/or damages suffered. Indemnity literally means “security against loss”, which implies that the parties can keep themselves safe against the loss. In contracting, an insured party’s indemnity is something voluntarily granted to avoid suffering damages. If the indemnifying party indemnifies another person, then the other person does not have any liability.

To be more specific, here are some basic components to expect in an indemnity agreement:

  • The parties involved and their roles
  • A detailed explanation of the indemnification obligation
  • Activity or event that triggers the indemnification
  • Limitation of liability
  • Governing law and jurisdiction
  • Expenses incurred in legal actions
  • Notice of claim

These components may vary depending on the situation, but they serve as a broad outline for what to expect in an indemnity agreement.

Indemnity agreements and state laws

In some states, the indemnity clauses may not apply in civil proceedings under state law. Several contracts contain clauses stating that the company will indemnify or defend the property owner.

Indemnity insurance

Often, an agreement will be created within an insurance agreement provided by an insurance company. Having an insurance policy allows companies (or individuals) to protect themselves. In some cases, the indemnification clause for coverage does not cover the full amount of damages paid even if the indemnities were not paid.

Hold harmless agreement

Hold harmless agreements are a subset of indemnity agreements. They may provide protection from liability, but they do not necessarily involve compensation for losses or damages.

Protecting the indemnified party

Indemnity agreements protect the indemnitee from being held liable for any losses or damages incurred. It can also cover legal fees, which can be a financial burden for the indemnified party.

FAQ About Indemnity Agreement Documents

Indemnifications are classified based on the extent and scope of the protection offered. The types of indemnity agreements are: intermediate form, limited form, and broad form indemnity agreement.
An indemnity document limits liability for damages. In simple terms, indemnity identifies who pays for what and when they are responsible for paying. This can protect both parties involved in the agreement from financial loss and legal action.
Generally speaking, an indemnification agreement represents liable damages. In case of homeowners insurance, homeowners are given the right to indemnify their property against any loss or damage.
For example, it is common in construction contracts for the contractor to agree to indemnify the property owner for any loss or damage caused by the contractor’s negligence.

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