Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgments resulting from lawsuits pertaining to their conduct.
The collection of money
. For example, indemnification occurs in insurance
when the policyholder
receives money to compensate
for an insured event
. Likewise, a company may receive indemnification from an employee
, especially a major executive, if the company suffers damages in a lawsuit as a result of the employee's illegal or unethical actions.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The process of shifting a loss from one party to another either because of an express agreement by the parties or because the law requires it under the circumstances.
Example: A purchaser of real estate discovers the property is subject to a lien that was placed against it prior to sale and pays the lien in order to avoid foreclosure; then the purchaser is entitled to indemnification, or reimbursement, from the prior owner who breached the warranties in the deed.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.