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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.

1. Parties: Identification and details of all parties to the agreement, including the indemnifier and indemnitee

2. Background: Context of the gap being covered, circumstances leading to the agreement, and relevant transaction details

3. Definitions: Key terms used throughout the agreement including 'Gap Period', 'Covered Losses', 'Indemnity Amount'

4. Scope of Indemnity: Detailed description of the gap coverage, specific losses or liabilities covered, and exclusions

5. Terms of Payment: Payment obligations, mechanisms, timing, and conditions for indemnity payments

6. Claims Procedure: Process for making claims, required documentation, and timing requirements

7. Duration: Term of the agreement, effective date, and any renewal provisions

8. Representations and Warranties: Statements of fact and assurances from both parties

9. Governing Law: Jurisdiction and applicable law governing the agreement