When an insurer takes full responsibility of actions that are going to occur against another person or company, it is known as the indemnity process and most commonly, it includes the money and financial help. In simple words, with indemnity, a person agrees to pay the bills and financial expenses that are due on another person on his behalf so that the other person or company is excluded of this process. The agreement that is signed by the insurer and insured person to execute the indemnity process is known as the indemnity agreement. This is a very important and legal document that is very common these days and it is also implacable or essential when a person or company applies for loan from a financial firm or bank and he has to present an insurer as security of safely return of the loan.
Brief Description of Indemnity Agreement:
It is very likely to happen that at some point, you will need some money and when no one can give you the loan, you will have to go to a loan firm, financial business or a bank to get the loan. With this loan, you will agree to return it in small installments with certain rate of interest. In this situation, no matter how willing you are to pay back the loan to the bank, the bank has to make sure that you will pay the loan back and there won’t be any liabilities after this deal. This is where the bank or the financial firm will ask you to introduce a person or a company as the insurer or guarantor who takes the responsibility and agrees that if you won’t be able to return the loan or pay off your debt, he will be held responsible and the bank or the financial firm will have the rights to ask him for the money that you owed them.
The agreement that is signed between you, the bank and the security person or insurer is known as the indemnity agreement. This agreement simply indicates that a certain person is responsible for paying off any debts or other responsibilities on behalf of another person and no matter what happens, the other person will not be held responsible and it will be the prime responsibility of the insurer or guarantor to perform the responsibilities that he agreed in the indemnity agreement.
Key Elements to add in the Indemnity Agreement:
- Name of the insurer/company that is taking responsibility
- Name of the insured person/business/company who is indemnified with the agreement
- Details of the indemnification
- Specification of the rights and obligation transferred to insurer with the agreement
- Compromises made by both parties in the agreement
- Compensation for the insurer
- Terms and conditions of the agreement
- Mutually agreed clauses of the agreement
- Termination of the agreement
- Results of violation of the agreement
- Legal rights, authorities, obligations and responsibilities of each party
- Limitations and validation of the agreement
- Signature of both parties
Here is preview of a Free Sample Indemnity Agreement Template created using MS Word,
Here is download link for this Indemnity Agreement Template,