Indemnification Meaning
Indemnification means compensating another party for a loss, damage, or cost that they incur — usually because a contract requires you to. In business agreements, it's the mechanism that decides who actually pays when something goes wrong, such as a third-party lawsuit or a data breach.
How Is "Indemnification" Used in a Sentence?
You'll typically see the word in contract clauses and negotiation emails rather than casual conversation:
- "The vendor agreed to provide indemnification for third-party IP claims."
- "We need mutual indemnification before this goes to signature."
- "Our indemnification obligation is capped at the fees paid in the prior 12 months."
Indemnification Word Forms and Related Terms
Most confusion around this term comes from its different word forms and the parties they describe:
| Term | What it means |
|---|---|
| Indemnification (noun) | The act of compensating someone for a covered loss. |
| Indemnify (verb) | To promise to cover another party's losses if a specified event occurs. |
| Indemnity (noun) | The contractual right or protection itself, as written into the agreement. |
| Indemnitor | The party that agrees to pay or cover the losses. |
| Indemnitee | The party being protected by the obligation. |
| Hold harmless | Frequently paired with indemnify; treatment varies by jurisdiction (see FAQ below). |
Want the Full Breakdown?
This page covers what the term means. For how the claims process actually works, what an indemnification clause should spell out, and how it differs from indemnity, see What Is Indemnification? Indemnification Clauses Explained.
Frequently Asked Questions
What does it mean to indemnify someone?
To indemnify someone means to agree to cover their losses, damages, or costs if a specified event occurs. It's the verb form of indemnification, and it describes the promise rather than the payment itself.
What's the difference between an indemnitor and an indemnitee?
The indemnitor is the party that agrees to pay or cover losses. The indemnitee is the party being protected. If a vendor indemnifies its customer, the vendor is the indemnitor and the customer is the indemnitee.
Does "hold harmless" mean the same thing as indemnify?
They're closely related and often paired as "indemnify and hold harmless." Some jurisdictions treat them as effectively synonymous, while others read hold harmless as a promise not to hold the other party liable and indemnify as a promise to reimburse. Because the treatment varies, this is worth confirming with counsel for high-value agreements.
This glossary entry provides general information, not legal advice. Indemnification terminology and enforceability vary by jurisdiction and contract type.