An indemnity clause requires that one party indemnify the other, in the event that certain expenses are incurred.  Contractors generally indemnify and hold harmless the owner of and from any and all claims, demands, losses, causes of action, damage, lawsuits, judgments, including attorneys’ fees and costs, arising out of or relating to the work of the contractor.  This safeguard every possible potential loss caused to the owner by the acts of the contractor.

Typical indemnity clause in agreements between owners and contractors ensures this indemnification.  Scope of such clauses can be further narrowed down by stating that indemnification of all such damage, claims, demands etc  shall be limited to the extend caused by, arising out of or relating to the work of such contractor.