Indemnification

Indemnification is when one party compensates another party for any obligation it has to a third party. For example, let’s say a defendant is sued but has an insurance policy. If the defendant must pay compensation to the plaintiff, then the defendant will ask the insurance company for indemnification. The insurance company will indemnify (verb form of indemnification) the defendant for any payments it makes to the plaintiff. In a civil lawsuit, one defendant will often seek indemnification from another defendant or from a third party.