Indemnity is a legal concept that protects one party from financial loss or damage caused by another party. It often involves a contract where one party agrees to compensate the other for specific losses, expenses, or liabilities. For example, in an insurance policy, the insurer provides indemnity to the policyholder in case of accidents or damages, ensuring they are not left to bear the financial burden alone. In business, indemnity clauses are common in contracts to safeguard against potential risks. If a contractor causes damage while working on a project, the indemnity clause may require them to cover the costs incurred by the client. This helps both parties manage risks and responsibilities effectively.