What is the Difference Between Indemnity and Waiver?

waiver agreement

There are many phrases you’ll notice when you’re drafting waivers for your business. Some seem straightforward, while others are more familiar to those in the legal profession. However, if you want to ensure your business is protected, it’s essential to understand every one of these new terms.

One of the most complex of these terms is indemnification. It’s found most often in the indemnity clause, a central aspect of most legally enforceable contracts. What is an indemnification agreement? Don’t worry, we’ll show you more below. We’ll cover the basics of indemnity and show you how an indemnity clause or indemnification agreement can be used to safeguard your business from unnecessary risk.

What does indemnity mean?

First, let’s define indemnity and show how it can be used in the context of legal waivers and contracts. There are two aspects of indemnity central to its definition. When used in an insurance or financial context, indemnity refers to a contractual agreement between two parties in which one party agrees to pay the other for any loss or damages covered under the contract.

When used in a legal context, indemnity refers to an exemption from liability. By signing an indemnity clause, an individual signifies they’re willing to exempt the other party from liability inherent to participating in the applicable activity.

What is an indemnity clause?

Most standard waiver forms carry an indemnity clause. This is a section of the waiver  the participant signs to acknowledge they’re willing to exempt an individual or business from liability if they suffer loss or damage due to their participation in the chosen activity.

If you run a business that operates activities with any level of risk, you need to ensure your waiver forms contain an indemnity clause. Even if you think your company carries minimal risk, using an indemnification agreement or clause helps ensure you’re protected from even the most unpredictable incidents. Two parties may enter into an indemnity clause: the indemnifier and the indemnitee (or indemnified party). 

What is an Indemnifier?

When an individual signs an indemnity clause, they agree to remove liability risk and hold the other party harmless. This makes the person who signs an indemnity clause the indemnifier in this agreement.

What is an Indemnitee?

Any organization offering indemnity clauses as part of its standard waiver form is positioning itself as the indemnitee, or the indemnified party. This means that anyone who signs their waiver agrees to hold the business harmless and remove liability that would typically be associated with the event, activities, or services offered.

The difference between waivers and indemnity

Too many business owners don’t understand the basics of waivers or don’t think their activities or services are risky enough to merit the use of these sensible protective measures. Unfortunately, there have been many situations in the past where lawsuits have proven them wrong.

In a legal sense, an indemnity clause is simply something that’s part of a liability waiver. It helps clarify that the person signing the clause (the indemnifier) is agreeing to remove liability from the business so they can participate in the related activity, event, or service.

However, in order to do this, the person signing the waiver needs to understand the risks involved, as well as the details of the activity. Other sections of your waiver should make this information clear.

There have been lawsuits in the past that have been allowed to continue even with an indemnification agreement in place simply because the agreement was too broad or ambiguous. Like any successful liability waiver, your indemnity clause should always be written in the clearest possible language.

WaiverForever is a great solution for your business  

No matter your legal acumen, you should never have to figure out how to write an indemnification agreement or indemnity clause on your own. Let our experts help.

At WaiverForever, our simple and easy liability waiver service helps companies create and execute customized waivers that can help protect their business. With our help, we can assist you in the creation of a custom waiver, complete with an effective indemnity clause. Then, you can use our platform to capture waivers from customers and store them indefinitely.

WaiverForever integrates with many services, such as Google Drive, Mailchimp, and Calendly, and helps to ensure your waivers are always accessible, no matter your location or device used.

Want to learn more? Contact us today to start a free trial.