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In Law, What Does "Indemnify" Mean?

Wheelchair makers may require hospitals to indemnify them against any accident a patient may have while using their product.
Insurance is a form of indemnification.
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  • Written By: Elise Czajkowski
  • Edited By: Susan Barwick
  • Last Modified Date: 27 June 2014
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In law, to indemnify means to protect a party from suffering any losses. Indemnity is a form of compensation for losses or damages, often in relation to a legal contract. The term refers to both the pre-loss guarantee of compensation and the compensation itself.

The most common type of indemnity is insurance. An insurer indemnifies a policy holder by guaranteeing that the insurer will cover any losses related to certain events. If the policy holder suffers this type of loss, the insurer repays the policy holder the costs associated with the loss.

For instance, a homeowner may have an insurance policy that insures against losses by fire, theft, or flood. In the event of a house fire, the insurer will then pay the homeowner for any losses in the fire. In this way, insurance companies indemnify policy holders.

Indemnity may also refer to a contractual agreement to cover losses suffered by another party. For instance, a company who hires freelance workers to cover projects for a client may agree to indemnify the client if a freelance worker causes a loss to the client. In this case, the company who hired the freelancers will pay for those losses.

The agreement to indemnify another party is always contractual. This means that both parties have agreed to the indemnity. In this way, indemnification differs from damages ordered by a court, in which the payer has no choice.

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In most types of insurance contracts, the insurer agrees to indemnify a policy holder by agreeing only to cover actual losses. For example, in the case of a house fire, the homeowner must prove the amount lost. The insurance company will then repay this money.

A different type of indemnification occurs with life insurance. In this instance, the insurance company is obligated to pay out the full amount of the policy, regardless of any tangible losses incurred as a result of the insured's death. In some cases, an insurance policy may contain a double indemnity clause, in which the insurer agrees to pay double the amount of the policy if the insured's death is accidental.

Another type of indemnity insurance is prize indemnity insurance. An insurer agrees to indemnify a party who may be required to give away a large prize, such as a great sum of money or a car, though the odds that this will occur are unlikely. In exchange for the indemnity, the insured pays the insurer a fee.

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Discuss this Article

live2shop
Post 6

@burcinc - As far as I know, you usually don't need to indemnify the executor of an estate. The executor is usually paid for their services, but not an indemnity contract. But since the executor is a lawyer, he/she must feel the need to protect himself from any loss or damage he might receive during the handling of the case.

I can't imagine why the attorney would feel that he needs the protection of an indemnity contract.

Maybe you could ask him/her what circumstances would need to happen that he/she would need indemnity. Good luck!

Esther11
Post 5

I think that life insurance is a logical type of indemnity to have. It's particularly important if you have a family that would suffer greatly if you die. If both mother and father have full-time jobs, they both should have life insurance.

I know that you buy a policy for a certain amount and you pay a premium every month. If the policy-holder dies, the full amount of the policy is given to the beneficiary. I'm just wondering if a cost of living or interest is added onto the life payment. It seems only fair that they should.

cloudel
Post 4

To avoid getting sued, my cousin, who works in construction, signed a contract with an architect that included an indemnify and hold harmless clause. He was about to build an office building for the man, and he wanted protection from any accidents that might arise.

It’s a good thing that his contract did include that clause, because the building caught fire and burned totally down before it could be completed. The hold harmless clause protected my cousin from having to pay for the losses. Legally, the architect could not have sued him if he had wanted to make him pay.

candyquilt
Post 3

@burcinc-- Like the article said, indemnification is contractual. If this was not about a will, no one could require you to accept an indemnification agreement if you don't want to.

But since your uncle has passed away and there is a will, it might be a little different.

Has your uncle specified in his will whether the executor will or will not be paid and how much?

Please check for this. If there is no specification, you may have to agree to pay because usually the heirs pay the executor. Sometimes people already sort this out in their will, the executor may have been paid beforehand or may have agreed to do it without payment. But if your uncle has not mentioned this in his will, I think you and the other heirs will have to pay.

burcinc
Post 2

Hi, I'm one of the heirs along with my other siblings to my uncle's will and we are having some problems with the attorneys that are dealing with our case because they are requiring us to take responsibility of indemnifying the executor.

The executor is the attorney that my uncle appointed before his death to put his will into affect.

We are not sure if we should accept this agreement. Are we by law required to indemnify the executor? Is this how it usually works?

discographer
Post 1

Indemnity sounds like it is meant to protect the rights of the party that has lost or suffered. But I think that when it comes to insurance, this is not really the case. Yes, insurance indemnifies the insurance holder, but it is also getting a fee in return. If the fees collected from insurance holders didn't provide profit for the insurance companies, I'm sure that they would run out of business.

It's interesting to me because I feel that if someone has lost property or life because of an accident like a fire, a natural disaster or a car accident, it should be their right to be indemnified. But unfortunately, even this right comes with monetary cost.

It would be so nice if the the government could indemnify us for these losses without a fee. I know some indemnification happens for natural disasters like hurricanes, but not entirely and not for other losses either.

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