What is an Indemnity Bond?
Indemnify means to make compensation to for incurred hurt, loss, or damage.
An Indemnity Bond is a contract in which one party promises the other from any loss caused to him by the conduct of the person who promises or any other person. It is called a Contract of Indemnity, under Section 124 of the Contract Act, 1872.
Illustration: A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity.
In short, Indemnity is a contractual agreement between two parties. In this arrangement, one party agrees or promises to pay for potential losses or damage.
Insurance is a deed of indemnity
An example is an insurance contract. In such a contract, the insurer or the indemnitor agrees to compensate the insured or the indemnitee for any damage or losses in return for the premiums paid by the insured to the insurer.
With indemnity, the insurer indemnifies the policyholder. That means, the Insurance company promises to compensate the individual or business from any loss coming under the insurance cover.
Stamp duty for Indemnity bond
The stamp duty as per Kerala Stamp Act, 1959 for an Indemnity bond (item 32 of its Schedule) is Rs 500/ since 2015.
That means, the Contract of Indemnity should be prepared on Rs 500/ Stamp Paper to make it legally valid.
Format of a Deed of Indemnity
I,_________________(the Promisor) son of __________________, resident of ___________________________________________________ hereby undertake to indemnify the ________________________( the Promisee) against any possible claim by any person in future and holds harmless the Promisee and his agents or from all claims, liabilities, damages and expenses in all respects that may be advanced against the Promisee on account of _______________________
Place:
Date: Signature of the Promisor
Witnesses
1
2
