A letter of indemnity is written by a third party on behalf of someone else to cover against losses or damages. This letter is used to state that if one party fails to make required payments or to complete a contract, the third party will take over making the payments or fulfil the terms of the contract. These letters are often used by banks, insurance companies and businesses.
Title the letter. "Letter of indemnity" or "Indemnity agreement" are titles often used for indemnity letters. Place the title at the top and centre of the page. Include the date of the letter on the left-hand side, below the title.
Address the letter to the recipient. A letter of indemnity is written to the indemnitee, the party receiving the indemnity. Letters of indemnity begin with "To" followed by the indemnitee's name.
Initiate the letter with precise words. For example, use "For good and valuable consideration." Then state that you are taking responsibility for the terms of the contract between the other two parties. Include the names of the parties involved. Make the offer clear and be polite.
State that you will accept responsibility in the event of default in the second paragraph. State that the indemnitee is held harmless against any claims that may occur with the transaction and, if the party fails to comply with the agreement, you will assume and fulfil all terms of the arrangement.
Close the letter with "Thank You." Type and sign your name underneath the closing comment.
A letter of indemnity is normally only one or two paragraphs long. Do not include filler words.
Tips and warnings
- A letter of indemnity is normally only one or two paragraphs long. Do not include filler words.