What Is an Indemnity Claim?

A claim for indemnity is a request by a person or entity to be compensated for a loss or an injury, according to Cornell University Law School. The claim is based on a contract, typically with a third party, that is likely not directly responsible for the loss or injury.

A request to be compensated under an insurance policy is the most common type of indemnity claim. The insurance company is not responsible for the insured’s loss or injury, but because an insurance policy exists, the company must compensate the person according to the terms of the agreement. Other types of indemnity claims can arise under ordinary business contracts. For example, a business that purchases the product line of another company can require the seller to execute an indemnity agreement that ensures it will compensate the buyer for any damages that are awarded to consumers based on product defects that are attributable to the seller’s ownership of the product line.