This term has different meanings depending on its context:
Generally, an undertaking by one person to meet a specific potential legal liability of another. An indemnity entitles the person indemnified to a payment if the event giving rise to the indemnity takes place.
In the context of insurance, the total cover available to the insured under an insurance policy. The principle of indemnity is to try, as far as possible, to place the insured in the same position after an insured loss as was occupied immediately prior to the event.