Indemnitee

What Does Indemnitee Mean?

An “indemnitee” is the person or business that receives indemnity from another party, known as the indemnifier, through a written agreement called an indemnity contract. An insurance contract is a type of indemnity contract.

When you sign an insurance contract, you—as the indemnitee—agree to pay a certain price (the insurance premium) in exchange for the promise that the insurance company will protect and provide financial security for you. The insurance company—acting as the indemnifier—agrees to restore you to the same financial position you were in before the loss in the event of an insured peril (such as fire, flood, or physical damage). In other words, the insurance company will indemnify you.

For example, if your house burns down in a fire, you would experience a financial loss. Not only would you lose your home and belongings, but you would also need to replace or repair them, as well as continue to pay the mortgage.

Under your insurance contract, as the indemnitee, the insurance company (the indemnifier) will provide protection and security (indemnity) by offering a monetary payout to help repair or rebuild your home, along with other coverage.

The insurance contract specifies who the indemnitee is—typically the owner of the property or vehicle. For instance, if you finance a car with your spouse, both you and your spouse would be listed as the indemnitees on the contract.

In most insurance contracts and declaration pages, you will be referred to as the “insured” rather than the “indemnitee,” since the role of the indemnitee is already defined at the start of the contract.

An indemnitee can be either an individual or a business entity.

Insuranceopedia Explains Indemnitee

An indemnity clause can be included in any type of contract. This clause transfers the legal or financial responsibility for a loss from one party to another under specified circumstances. Some may refer to this as a “hold harmless” agreement. For instance, a sales contract may include an indemnity clause that protects the producer from liability if an injury occurs due to the use of their product. For example, a chainsaw manufacturer might include a clause stating they are not responsible for any injuries resulting from the irresponsible operation of the chainsaw.

Each indemnity contract (including insurance contracts) outlines specific losses and circumstances that the indemnifier will and will not cover. For example, some insurance policies may reimburse you for hotel expenses if you need to live elsewhere while your home is being rebuilt. While the indemnifier promises to restore you to the same financial position you were in before the loss, there may be situations where they refuse to cover certain costs or include additional clauses that limit coverage. This can occur for various reasons, such as the loss being too expensive for the insurance company to cover (e.g., earthquake or flood damage to beachfront properties).

As the indemnitee, you also have obligations to fulfill in order to be indemnified after a loss. For example, most insurance contracts require you to take reasonable precautions to prevent damage or loss to your property, such as locking your doors to prevent theft or maintaining your home in good condition. It is always important to carefully read the fine print and consult with your broker to ensure you have the necessary coverage to be fully protected as the indemnitee.