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To indemnify, also known as indemnity or indemnification, means compensating a person for damages or losses they have incurred or will incur related to a specified accident, incident, or event. Typically, parties make a written agreement in which one party (indemnitor) promises to indemnify the other party (indemnitee) for future specified losses. 

The more common form of an indemnification agreement is the insurance policy. This often happens when an insurance company, as part of an individual's insurance policy, agrees to indemnify the insured person for losses that the insured person incurred due to accident or property damage. In this sort of agreement, party A would hire insurance company B. If party A and party C are involved in some incident that results in property or personal damage (ex: a car accident), insurance company B would assume any liability for which Party A might be responsible. After that, insurance company B would typically sue party C to recover damages. 

See Hercules Inc. et al v. United States, 516 U.S. 417 (1996).

[Last updated in March of 2023 by the Wex Definitions Team]