What Is an indemnity agreement?


Quick Answer

An indemnity agreement is a contract between two parties that releases one party of liability for damages caused by the actions of the other party, explains About.com. There are three types of indemnity agreements: broad, comparative and limited.

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Full Answer

Broad form agreements are common in construction and place no fault on the party supplying the services for any damage, states About.com. Broad form agreements are illegal in several states. Limited indemnities limit compensation for damages to the fee charged by a party or to a fixed amount, explains the Houston Chronicle. A comparative agreement employs common law, meaning if a party is found 20 percent liable for damages, it must pay for 20 percent of the damages, reports About.com.

An example of an indemnity agreement would be signing a release form to participate in a dangerous activity, such as parasailing, states About.com

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