Indemnity is meant for third-party claims, but some drafts slide in buyer refunds, lost revenues, or other first-party losses by phrasing them as amounts the buyer "pays or incurs." That wording can bypass liability caps and turn ordinary performance issues into indemnifiable events.
Examples include data breach indemnities that cover the buyer's internal remediation costs, or IP indemnities that require the vendor to replace products and pay migration expenses regardless of whether a third party ever complains. Vendors see these as warranty remedies, not indemnity, and will push back to keep them within negotiated caps or service credit structures.
Buyers should be explicit about which first-party costs matter most (e.g., replacement costs or migration support) and negotiate them openly rather than hiding them in the indemnity clause. Clarity reduces fights later and keeps insurance alignment straightforward.
THIS IS NOT LEGAL ADVICE.