An indemnity clause is a promise by one party to cover certain losses, claims or costs suffered by another party.
Indemnities are used to allocate specific risks. For example, a supplier may indemnify a customer for third-party intellectual property claims, or a service provider may indemnify a client for certain data breach costs. The clause should explain which events are covered, which losses are recoverable, and whether any liability cap applies.
Because indemnities can move significant financial risk from one party to another, they should be checked carefully before signing.
This answer is general information, not legal advice.