Protection against loss, damage, or legal liability, or compensation paid for such loss. An indemnity agreement requires one party to reimburse another for specified losses or legal costs.
From Latin 'indemnitas' meaning 'freedom from loss,' from 'indemnis' (unharmed) - 'in-' (not) plus 'damnum' (loss, damage). The concept developed in Roman law and became central to English commercial law by the 17th century.
Indemnity is like having a financial bodyguard - someone else promises to take the hit (pay the costs) if you get sued or suffer losses from a specific situation. Insurance companies are professional indemnitors, but the concept shows up everywhere from construction contracts to corporate mergers!
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