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An indemnity agreement is a contract where one party agrees to take financial responsibility for certain expenses or damages. Examples include medical insurance, property leases, and investment services. Some indemnity agreements are difficult to enforce, such as those found on amusement park tickets. Recreational activities like skydiving and parasailing also often require participants to sign an indemnity agreement.
An indemnity agreement is one in which financial responsibility is decided. For example, a medical insurance contract is an indemnity agreement. In it, the insurer agrees to pay certain medical expenses as defined by the contract. So part of the financial responsibility for medical bills now belongs to the insurer. The insured, on the other hand, is indemnified, i.e. exempted from paying certain expenses as provided for by his policy.
Indemnification is the act of not being held liable or having costs protected by passing them on to another party. Some actions almost always include an indemnity agreement. Tenants who sign a lease often agree to indemnify the property owner against costs or damages associated with being harmed on the property. This indemnity agreement normally has an additional clause stating that the property owner must repair anything that could be potentially dangerous.
Thus a landlord would be compensated for damages if a tenant tripped and fell down the stairs. However, if the stairs were in poor condition, and the matter was brought to the attention of the landlord, an indemnity agreement would not prevent the tenant from claiming damages if the poor condition caused the accident.
Tenants usually also agree to be held liable for costs if the property is damaged. Agreeing to clean the carpets or flea bomb an apartment after you leave the property is an indemnity agreement that protects the landlord. Deposits cannot be returned when a tenant fails to fulfill their obligations set out in an indemnity agreement.
Sometimes an indemnity agreement is signed when people use a company to invest in trading stocks or bonds. In order to use the company’s services, the investor agrees to hold the company not responsible for any money losses that may be incurred by the investment.
An indemnity agreement is occasionally used when intellectual property is leased. This is very similar to a tenant indemnity agreement. The owner of the intellectual property seeks exemption for any damages suffered by the person using the property. The lessee also agrees to take any legal action arising out of his use of the property.
Another type of indemnity agreement is more difficult to enforce. If you’ve ever been to an amusement park, you may notice that the ticket contains fine print about you riding rides at your own risk. The goal, of course, is to indemnify the park against a person it sues for damages if injured on a ride. This rarely works, because technically you haven’t signed an agreement. Most people injured on an amusement park ride are able to successfully sue for damages.
Other recreational activities that could get you into an indemnity agreement are things like skydiving and parasailing. Most companies will not allow you to participate in such activities unless you actually sign an indemnity agreement that holds them not liable for personal injury or death. In truth, most businesses offering somewhat dangerous recreational activities could not remain solvent without such an arrangement.
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