Editing Indemnity (section)

{{Short description|Contractual obligation to compensate for losses incurred by the other party}}
{{About|financial compensations|the religious belief|Indemnity (Unification Church)}}
{{Contract law}}

In [[contract law]], an '''indemnity''' is a contractual obligation of one [[Party (law)|party]] (the ''indemnitor'') to [[Financial compensation|compensate]] the loss incurred by another party (the ''indemnitee'') due to the relevant acts of the indemnitor or any other party. The duty to indemnify is usually, but not always, coextensive with the contractual duty to "hold harmless" or "save harmless".  In contrast, a "[[guarantee]]" is an obligation of one party (the ''guarantor'') to another party to perform the promise of a relevant other party if that other party [[Default (finance)|defaults]].

Indemnities form the basis of many [[insurance]] contracts; for example, a car owner may purchase different kinds of insurance as an indemnity for various kinds of loss arising from operation of the car, such as damage to the car itself, or medical expenses following an accident. In an [[Agency (law)|agency]] context, a principal may be obligated to indemnify their agent for liabilities incurred while carrying out responsibilities under the relationship. While the events giving rise to an indemnity may be specified by contract, the actions that must be taken to compensate the injured party are largely unpredictable, and the maximum compensation is often expressly limited.