What is indemnity in a contract?

Indemnity is contract language about responsibility for certain losses, claims, damages, costs, or expenses. It often appears in service agreements, vendor contracts, contractor agreements, event contracts, and software or technology agreements.

This guide is general information only, not legal advice. It explains what to locate when you see an indemnity clause.

Where indemnity clauses appear

Indemnity terms may appear under headings like "Indemnification," "Hold Harmless," "Defense," "Claims," or "Liability." Sometimes the clause is near insurance or limitation of liability language.

Details to locate

• Who gives the indemnity
• Who receives the indemnity
• What claims or losses are covered
• Whether defense costs or attorney fees are included
• Whether the clause covers third-party claims, direct claims, or both
• Whether the obligation is limited by a liability cap or insurance requirement

Why it may matter

Indemnity language can affect who is responsible if a claim, loss, or cost arises from the contract relationship. The scope can be narrow or broad, and it may connect to insurance, liability caps, and defense obligations.

Questions to ask before signing

• Whether the indemnity is mutual or one-sided
• Whether the covered claims are clearly listed
• Whether defense obligations are included
• Whether the indemnity is limited by a cap, exclusion, or insurance term