Indemnification
A promise to cover specified losses suffered by another party.
Also called Indemnity
Indemnification in practice
Hypothetical example: the seller agrees to cover a specified unpaid tax bill from before the sale. If the buyer pays that bill and meets the agreement’s conditions, it can seek repayment from the seller.
What to check
A claim alone does not prove that payment is owed. Check the agreement and whether the party that owes payment can pay.