Indemnity
Indemnity refers to a promise to correct any losses, damage, or legal liability that are incurred by a person or a business. This is one of the key services provided by the insurance industry.
To indemnify someone, a party (usually an insurance company) agrees to cover the costs or responsibility needed after a potential accident or loss. Knowing when to use and apply indemnity whether as clauses in a contract or when taking out an insurance policy is a crucial consideration when creating many legal documents.
Find out below what indemnity means and how it is used in practical terms for legal and personal necessities.
Other Meanings of Indemnity
There are a few other meanings for indemnity depending on the context. First of all, indemnity can refer to compensation that is paid in cases of negligence that result in loss or damage.
In this sense, it can also be applied as a legal term in cases where remuneration needs to be made for losses or damage inflicted by an outside party or natural disaster. This was the case in 2020 when the government stepped in and helped individuals and businesses financially following the COVID-19 outbreak.
Lastly, it can be used in business to protect against legal liability for losses or damages incurred by a party when entering into a contract. This will usually appear as an indemnity clause in the written agreement.
When Is Indemnity Needed?
Indemnity is a useful provision to protect you, your family, and your assets in the event of potential accidents or financial losses. It is also absolutely necessary for some purchases and agreements and is sensible to have in many other circumstances.
You will often need indemnity protection for the following situations:
- Buying a house
- To cover yourself in case of injury or sickness
- Protecting your family in the case of your death
- Owning a car
- Legal contracts
- For professional purposes
It is also possible you may need indemnity clauses if you are submitting articles of incorporation in some states. This is worded to legally protect directors, executives, and employees from liability for their actions working for the newly formed company.
Agreements providing indemnity and coverage from liabilities may also contain a period of indemnity which will eventually expire. This is often the case when buying insurance, as this duration will cover the length of the contract.
Read more: Indemnify by the Legal Information Institute (LII) of Cornell Law School.
Indemnity FAQs
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What Cannot Be Indemnified?
There are some limits to indemnity. It does not cover all acts and circumstances.
A notable exception to most indemnity and protection from liability is illegal activity. You cannot pursue protection or damages if you have committed criminal or unlawful acts.
Additionally, a lot of indemnity clauses don’t apply in cases of gross negligence or willful misconduct. This is because these acts are more likely to intentionally cause harm and not take the proper precautions to avoid damage and loss.
-
What Does it Mean to Indemnify?
To indemnify someone, a party (usually an insurance company) agrees to cover the costs or responsibility needed after a potential accident or loss. Knowing when to use and apply indemnity whether as clauses in a contract or when taking out an insurance policy is a crucial consideration when creating many legal documents.
Indemnity refers to a promise to correct any losses, damage, or legal liability that are incurred by a person or a business. This is one of the key services provided by the insurance industry.
To indemnify someone, a party (usually an insurance company) agrees to cover the costs or responsibility needed after a potential accident or loss. Knowing when to use and apply indemnity whether as clauses in a contract or when taking out an insurance policy is a crucial consideration when creating many legal documents.
Find out below what indemnity means and how it is used in practical terms for legal and personal necessities.
Other Meanings of Indemnity
There are a few other meanings for indemnity depending on the context. First of all, indemnity can refer to compensation that is paid in cases of negligence that result in loss or damage.
In this sense, it can also be applied as a legal term in cases where remuneration needs to be made for losses or damage inflicted by an outside party or natural disaster. This was the case in 2020 when the government stepped in and helped individuals and businesses financially following the COVID-19 outbreak.
Lastly, it can be used in business to protect against legal liability for losses or damages incurred by a party when entering into a contract. This will usually appear as an indemnity clause in the written agreement.
When Is Indemnity Needed?
Indemnity is a useful provision to protect you, your family, and your assets in the event of potential accidents or financial losses. It is also absolutely necessary for some purchases and agreements and is sensible to have in many other circumstances.
You will often need indemnity protection for the following situations:
- Buying a house
- To cover yourself in case of injury or sickness
- Protecting your family in the case of your death
- Owning a car
- Legal contracts
- For professional purposes
It is also possible you may need indemnity clauses if you are submitting articles of incorporation in some states. This is worded to legally protect directors, executives, and employees from liability for their actions working for the newly formed company.
Agreements providing indemnity and coverage from liabilities may also contain a period of indemnity which will eventually expire. This is often the case when buying insurance, as this duration will cover the length of the contract.
Read more: Indemnify by the Legal Information Institute (LII) of Cornell Law School.
Indemnity FAQs
-
What Cannot Be Indemnified?
There are some limits to indemnity. It does not cover all acts and circumstances.
A notable exception to most indemnity and protection from liability is illegal activity. You cannot pursue protection or damages if you have committed criminal or unlawful acts.
Additionally, a lot of indemnity clauses don’t apply in cases of gross negligence or willful misconduct. This is because these acts are more likely to intentionally cause harm and not take the proper precautions to avoid damage and loss.
-
What Does it Mean to Indemnify?
To indemnify someone, a party (usually an insurance company) agrees to cover the costs or responsibility needed after a potential accident or loss. Knowing when to use and apply indemnity whether as clauses in a contract or when taking out an insurance policy is a crucial consideration when creating many legal documents.