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Indemnity, which can be found most often in areas concerning financial matters, is an agreement of some type that is composed to ensure that compensation or restitution exists in the event of any loss or damages concerning a particular occurrence. In this way, it stems from the exact same position that insurance companies take as they agree to cover their clients based on several stipulations. Indemnity is meant to serve as protection in the case of issues arising from subsequent claims.

An example would be if you were the owner of a vehicle manufacturer. Following the failure of the breaks of one of the models your plant had produced, a lawsuit was filed against you due to the fact that your initial insurance coverage was not deemed sufficient for the damages the plaintiff incurred. How you are insured according to indemnity, however, may serve you well as it can potentially keep your company from being harmed by too substantial of a loss financially-speaking.

One of the main uses of indemnity is to maintain the financial structure of a person or company as prior to any unfortunate occurrence leading to a serious claim against them. Often, there exist "indemnity clauses," which protect one party over the other. This could be found on an agreement when attempting to rent property, for instance.

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