What does indemnification refer to in agreements between principal authorities?

Indemnification in agreements between principal authorities involves a provision for compensation within the agreement. This means that one party agrees to compensate the other for certain damages or losses that might arise from specific actions or events. In the context of building projects, this can include covering costs associated with legal claims, damages resulting from construction defects, or any liabilities that could impact one of the authorities involved in the agreement.

The essence of indemnification is to protect one party from financial loss or liability due to the actions of the other party or third parties involved in the project. This principle is fundamental in agreements where risks are shared, as it ensures that there is a clear understanding of responsibilities and protections in place. In this case, understanding that indemnification is about compensation clarifies its role in managing risk in agreements between authorities overseeing building or construction activities.