Indemnification

What Is Indemnification? Indemnification is a risk-allocation mechanism in contracts where one party (the indemnitor) agrees to hold harmless and compensate another party (the indemnitee) for certain losses, damages, claims, or expenses. It effectively shifts financial responsibility for specific risks from one party to another. ## Types of Indemnification - **Broad form indemnification** covers all losses, including those caused by the indemnitee's own negligence - **Intermediate form indemnification** covers losses except those caused solely by the indemnitee's negligence - **Limited form indemnification** covers only losses caused by the indemnitor's actions ## Key Elements An effective indemnification clause should clearly define the scope of covered losses, any caps on liability, the process for making indemnification claims, and the duty to defend against third-party claims. Many states have anti-indemnity statutes that restrict overly broad indemnification provisions, particularly in construction and service contracts. Understanding the applicable law is essential when drafting or negotiating these clauses.