Do You Understand Indemnity And Its Implications?
So, you decide to go skydiving in New Zealand and excited with the prospect of free fall but before you take the plunge you are supposed to sign a waiver form. In fact, for all adventure sports and activities where there is some sort of risk involved you are expected to sign a form which states in no unequivocal terms that should any untoward incident happen, the company involved is absolved of all responsibilities. This kind of clause is also present in all legal documents drawn in all financial matters. Have you heard of indemnity?
What is Indemnity?
It is basically a transfer of liability for loss or damage to property or goods. This means that when you indemnify someone you are in effect freeing them from the associated liability. It also means that if you are the person who has incurred a loss or a damage it is the duty of the other person to make good the loss and offer reimbursement. Of course, indemnity is not protection from illegal activities.
The construction business and rental businesses usually rely a lot on indemnity when compared with other industries.
Types of Indemnity Agreements
Just like there are several types of investments there are different types of indemnity agreements. Take the case of BTC Profit, an automated trading system, which has become a profitable passive income for several people who understand the workings of the system. This review will provide more information should you be interested.
Based on the industry there are different types of indemnity agreements.
- Broad Form Indemnity Agreements: This type of indemnity makes the Indemnitor responsible not only for his mistakes but that of the third-party negligence. This agreement uses the phrase, “caused in whole or part.” Usually, proving the liability in these cases is long drawn.
- Limited Indemnity agreement: This type of contract includes the word, “only in part” which basically means that they are not responsible even if they are negligent.
- Intermediate indemnity agreement: This type of agreement holds shifts the responsibility to the party only and only if they are entirely responsible for the loss or damage. Since it does not use the word, “Whole” it will not cover even if the negligence is 99%.
Uses of Indemnity Agreement
Usually, indemnity clauses are found in the construction industry to protect the contractor from negligence and related lawsuits. They are also quite common in insurance companies wherein the insurance company is indemnified for any accident, loss or damage to the property.