What is Indemnity?

Legal Definition
An indemnity is an obligation by a person (indemnitor) to provide compensation for a particular loss suffered by another person (indemnitee).

Indemnities form the basis of many insurance contracts; for example, a car owner may purchase different kinds of insurance as an indemnity for various kinds of loss arising from operation of the car, such as damage to the car itself, or medical expenses following an accident. In an agency context, a principal may be obligated to indemnify their agent for liabilities incurred while carrying out responsibilities under the relationship. While the events giving rise to an indemnity may be specified by contract, the actions that must be taken to compensate the injured party are largely unpredictable, and the maximum compensation is often expressly limited.
-- Wikipedia
Legal Definition
That which is given to a person to prevent his suffering damage. 2 McCord, 279. Sometimes it signifies diminution; a tenant who has been interrupted in the enjoyment of his lease may require an indemnity from the lessor, that is, a reduction of his rent.

2. It is a rule established in all just governments that, when private property is required for public, use, indemnity shall be given by the public to the owner. This is the case in the United States. See Code Civil, art. 545. See Damnification.

3. Contracts made for the purpose of indemnifying a person for doing an act for which he could be indicted, or an agreement to, compensate a public officer for doing an act which is forbidden by law, or omitting to do one which the law commands, are absolutely void. But when the agreement with an officer was not to induce him to neglect his duty, but to test a legal right, as to indemnify him for not executing an execution, it was held to be good. 1 Bouv. Inst. n. 780.
-- Bouviers Law Dictionary
Legal Definition
An indemnity is a collateral contract or assurance, by which one person engages to secure another against an anticipated loss or to prevent him from being damnified by the legal consequences of an act or forbearance on the part of one of the parties or of some third person. See Civ. Code Cal. § 2772, Davis v. Phoenix Ins. Co., Ill Cal. 409, 48 Pac. 1115; Vandiver v. Poliak, 107 Ala. 547, 19 South. 180, 54 Am. St. Rep. 118; Henderson-Achert Lithographic Co. v. John Shillito Co., 64 Ohio St 236, 60 N. E. 295, 83 Am. St Rep. 745. Thus, in-suranco is a contract of indemnity. So an indemnifying bond is given to a sheriff who fears to proceed under an execution where the property is claimed by a stranger. The term is also used to denote a compensation given to make the person whole from a loss already sustained; as where the government gives indemnity for private property taken by it for public use. A legislative act, assuring a general dispensation from punishment or exemption from prosecution to persons involved in offenses, omissions of official duty, or acts in excess of authority, is called an indemnity; strictly it is an act of indemnity.
See also
-- Black's Law Dictionary
Legal Definition
An obligation or duty, springing from a contract express or implied, on one person to make good any loss or damage another has incurred while acting at his request or for his benefit. See 107 Ala. 547, 54 Am. St. Rep. 118, 19 South. 180.
-- Ballentine's Law Dictionary