Glossary

Indemnity

Indemnity is the principle of restoring the insured to the financial position they held before a loss. Insurance makes the policyholder whole; it does not make them better off, which is why a $200,000 property cannot be insured for $500,000.

By Andrew Bate, Co-founderReviewed by Stuart BateUpdated September 14, 2026

Why this matters for property managers

Indemnity clauses also appear in management agreements, where the owner or manager agrees to indemnify the other for certain losses. Those clauses create contractual liability that only some policies cover — a reason to read the agreement and the policy together.

Worked example

An owner's agreement makes the manager indemnify the owner for any claim arising from a guest stay. A guest sues the owner after a pool injury. With contractual liability in the manager's general liability policy, the policy defends both; without it, the management company is paying the owner's lawyers out of revenue.

Indemnity clauses in management agreements

Beyond the insurance principle, indemnity is the clause in almost every management agreement where one party promises to cover the other's losses. Owners' templates often make the manager indemnify the owner for anything arising from a guest stay; managers' templates try to make it mutual and limited to negligence. Whatever is signed, the promise is only worth what insurance stands behind it: general liability with contractual liability coverage picks up the claims you agreed to take on, and an additional insured endorsement puts the owner inside the policy directly. Read the indemnity clause next to the insurance clause, and make both say the same thing.