Document background
The Gap Indemnity Agreement emerged as a critical risk management tool in the United States financial sector, particularly in situations where traditional insurance or coverage may leave exposed gaps in protection. This document is typically used when there's a potential disparity between asset values and outstanding obligations, such as in auto financing or real estate transactions. The agreement specifies the conditions under which the indemnitor will cover these gaps, the extent of coverage, and the process for making claims. It's essential to note that Gap Indemnity Agreements must comply with state-specific insurance regulations and may require different provisions depending on the jurisdiction and industry context.
