Compensation to a party for a loss or damage that has already occurred, or to guarantee through a contractual clause to repay another party for loss or damage that might occur in the future. The concept of indemnity is based on a contractual agreement made between two parties in which one party (the indemnitor, e.g. the insurer) agrees to pay for potential losses or damages caused by the other party (the indemnitee; e.g. the insured).
