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What is an example of an indemnity?

The most common example of indemnity in the financial sense is an insurance contract. For instance, in the case of home insurance, homeowners pay insurance to an insurance company in return for the homeowners being indemnified if the worst were to happen.

What is the indemnity provision in insurance policies?

Indemnity provisions involve a promise by one party to protect another party from claims for damages by a third-party. The intent of an indemnity provision is to transfer the risk of third-party claims to the party best-suited to bear the risk.

What does indemnity mean in simple terms?

Put simply, indemnity is a contractual agreement between two parties, where one party agrees to pay for potential losses or damages claimed by a third party.

What is the most common form of indemnity agreement?

The most common forms of indemnity agreements are broad form indemnity agreements, intermediate type indemnity agreements, and comparative form indemnity agreements. The usage of these agreements depends on the industry.

What are the two purposes of indemnity?

In legal terms, indemnity requires a nondelivering entity to compensate the aggrieved party for losses it incurred or expects to as a result of the nonperformance. An indemnity clause can also act an as exemption from liability from damages, so the wording of the agreement is extremely important.

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