An Indemnity Agreement is a contract between two parties that protects one party from liabilities, losses, claims, and damages during their involvement in an activity.

In an Indemnity Agreement there are two parties: the indemnitee and the indemnifier. The indemnitee is the party protected by the agreement. The indemnifier is the party providing the protection.

For example, a skydiving company is likely to require a customer to sign an Indemnity Agreement to protect it from liability if there’s an accident during a jump. In this scenario, the skydiving company is the indemnitee, and the customer is the indemnifier.

An Indemnity Agreement is also known as the following:

• Assignment of indemnity
• Contract of indemnity
• Hold harmless agreement
• Indemnification agreement
• No-fault agreement

Indemnity refers to protection from a loss or exemption from liability for damages or other financial claims. In an Indemnity Agreement, the indemnifier promises to save the indemnitee from loss caused to them by the indemnifier’s contract or by the conduct of any other person.

Signing an Indemnity Agreement is an important decision that shouldn't be taken lightly by either party.

Indemnitee

As the indemnitee, it may be a good idea to sign an agreement if your company provides a service where there is a risk of injury or damages to a property.

An Indemnity Agreement can be helpful in your personal life as well. For example, if your friend gets into an accident while driving your vehicle, you may be liable for any damages. However, the liability shifts to your friend if they sign an Indemnity Agreement before borrowing the vehicle.

Indemnifier

As the indemnifier, it’s a good idea to be cautious when signing an agreement. Carefully read the document, or have a lawyer review it to understand the risks and responsibilities you’re agreeing to cover.

Many circumstances can benefit from an Indemnity Agreement. Some common uses include:

• Providing services: Use an Indemnity Agreement to remove any liability when providing a service that may cause injury or damages.
• Hosting events: Use an Indemnity Agreement when hosting or facilitating an event, such as a concert or charity fundraiser, in case of a potential loss or accident.
• Purchasing real estate: Use an Indemnity Agreement to relieve any liability for future problems with the property, including problems caused by the seller.
• Renting property: Use an Indemnity Agreement when you allow a tenant to move in before the lease date to hold the tenant to all the lease provisions, even though they’re moving in early.
• Hiring workers: Use an Indemnity Agreement to absolve responsibility for any injuries or accidents caused by employees or contractors in the workplace.
• Working as a consultant: Use an Indemnity Agreement to relieve yourself of any liability that might come from your work.

Employees aren’t automatically entitled to Indemnity Agreements. However, an employee might ask for indemnity to avoid liability for any losses or damages resulting from the good faith performance of their duties or obligations associated with their job.

No, it isn’t a legal requirement to have a witness sign an Indemnity Agreement. However, many banks and other institutions will have their own internal requirements for valid documents, and witness signatures may be one of them.

An Indemnity Agreement doesn’t require a surety. A surety is a person or company who takes responsibility for another party’s inability to uphold their end of a deal. If an indemnifier can't cover the losses or damages related to their agreement, the surety becomes liable.

If you wish to have a surety in your Indemnity Agreement, include it in the additional clauses section of the document.

You can create an Indemnity Agreement by completing LawDepot’s questionnaire. Using our template ensures you complete the following necessary steps:

1. State who the agreement is protecting

State if the Indemnity Agreement will protect your party or the other party.

2. State your location

States and territories in India may have differing indemnity laws. Select your state or territory, and we’ll tailor your Indemnity Agreement to meet the laws and regulations of your location.

You can use LawDepot’s Indemnity Agreement template in:

• Andaman and Nicobar Islands
• Andhra Pradesh
• Arunachal Pradesh
• Assam
• Bihar
• Chandigarh
• Chhattisgarh
• Dadra and Nagar Haveli
• Dadra and Nagar Haveli and Daman and Diu
• Daman and Diu
• Goa
• Gujarat
• Haryana
• Himachal Pradesh
• Jammu and Kashmir
• Jharkhand
• Karnataka
• Kerala
• Ladakh
• Lakshadweep
• Madhya Pradesh
• Maharashtra
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• National Capital Territory of Delhi
• Odisha
• Puducherry
• Punjab
• Rajasthan
• Sikkim
• Tamil Nadu
• Telangana
• Tripura
• Uttar Pradesh
• Uttarakhand
• West Bengal

3. Outline the terms you wish to include

You may include any of the following terms in your Indemnity Agreement:

• Indemnity insurance: The indemnifier should obtain liability insurance if they don’t have the resources to cover all the foreseeable liabilities under the agreement. You should weigh the cost of insurance against the protection it provides to determine if insurance coverage is reasonable for your contract.
• Indemnification against criminal proceedings: Provide basic protection against civil lawsuits or criminal proceedings. Indemnification for a criminal proceeding is only available if the indemnitee has no reason to believe their conduct was unlawful.
• Confidentiality clause: Ensure outside parties can’t access confidential or proprietary information within the agreement.
• Monetary limit: Specify the maxiumum monetary amount of indenification (protection) for each claim or action. Otherwise, the amount of indemnification could be unlimited.

4. Describe the subject of the indemnity

Choose the category that best describes the subject of your Indemnity Agreement:

• Service: Provides indemnity relating to the provision of services in a contract. For example, a construction company may seek indemnity for its workers from any damage they unintentionally cause to a property while providing a service.
• Activity: Provides indemnity for a range of activities like hosting events, borrowing dangerous equipment, or providing thrill-seeking entertainment (e.g., bungee jumping). Choose this category if you’re unsure which one is best for you.
• Transaction: Protects sellers and renters against liability for any issue concerning goods that are being sold or rented. This category also applies to landlords and tenants in a Lease Agreement.

5. Provide the indemnitee’s information

Include the indemnitee’s name, address, and whether they are an individual or company in the agreement.

The agreement can cover multiple indemnitees if they’re intimately related, such as spouses or business partners. However, if the indemnitees are working individually, they will each need an Indemnity Agreement.

6. Provide the indemnifier’s information

Include the indemnifier’s name, address, and whether they are an individual or company in the agreement.

If there are multiple indemnifiers, they will be jointly and individually liable for any claim or damages. This means each indemnifier is responsible for the entire claim or damages.

7. Outline any additional clauses

Include any additional terms or conditions that your Indemnity Agreement doesn't already cover (e.g., a surety).

8. Provide the signing details

State the agreement’s execution date. The execution date is the day the parties sign the agreement.

It isn't legally necessary to have witnesses sign the document, but it might be a good idea to do so if you need to submit your Indemnity Agreement to a bank or other institution.