Whether or not your company is small and large, tech or professional, indemnification clauses can be useful. These clauses are typically used when either: a business wants to guarantee it's service or product; or. a business wants to protect itself from liability, especially in cases of sub-contractors.

When can you seek indemnification?

When you hire a firm to remodel your place of business, for example, the contract should protect you from liability. If shoddy workmanship causes a customer or visitor to be injured, you should be able to seek indemnity from the contractor so that he (and not you) will be responsible to pay for the person's injury.

Why do we need indemnification clause?

The most important part of an indemnification clause is that it protects the indemnified party from lawsuits filed by third parties. This protection is important because damaged parties are still able to pursue compensation for their losses even if this clause isn't in the contract.