Indemnification Agreement

An indemnification or indemnity agreement is a formal legal agreement, usually part of the employment or appointment agreement, between an individual director and the corporation. It states that if something goes wrong, and the director has done their best, the corporation will reimburse, to the director, the defence costs and the damages incurred. An indemnity agreement can be enforced in a court of law. 

Related terms: indemnification, indemnifiable loss.
Learn more, read an article: 3 Components of a D&O Insurance and Indemnity Program