Indemnification is a legal concept where one party agrees to compensate another for certain damages or losses. This often occurs in contracts, where one party promises to protect the other from financial harm resulting from specific events, such as lawsuits or claims. It helps allocate risk between parties, ensuring that the burden of loss falls on the party best able to manage it. In many cases, indemnification clauses are included in agreements involving business transactions, leases, or employment contracts. These clauses outline the conditions under which indemnification applies, specifying what types of losses are covered and any limitations on liability.