What does it mean to indemnify someone?

Indemnifying someone means to make them whole for damages they have incurred. This concept is fundamental in insurance and liability contexts. When one party agrees to indemnify another, they essentially promise to cover the costs related to losses or damages that the indemnified party would otherwise have to bear. This could involve reimbursing the party for expenses, covering legal costs, or compensating them for any financial losses resulting from a covered incident.

In commercial casualty insurance, indemnification is crucial because it ensures that businesses and individuals are not left grappling with the financial aftermath of unforeseen events, thereby promoting trust and stability in contractual relationships. By fulfilling this promise, the indemnifying party takes on the financial responsibility associated with certain risks, ensuring that the affected party does not suffer a net loss. This duty of indemnification can be outlined in contracts, professional agreements, and various types of insurance policies.

The other options provide interpretations that do not accurately capture the essence of indemnification: transferring risk does not imply making someone whole; creating legal obligations can be a result of many different contractual agreements; and protecting oneself from someone else's negligence does not encompass the broader obligation to compensate the injured party.