The Collaborative International Dictionary of English v.0.48:

Indemnify \In*dem"ni*fy\, v. t. [imp. & p. p. Indemnified; p.
   pr. & vb. n. Indemnifying.] [L. indemnis unhurt (in- not +
   damnum hurt, damage) + -fy. Cf. Damn, Damnify.]
   [1913 Webster]
   1. To save harmless; to secure against loss or damage; to
      insure.
      [1913 Webster]

            The states must at last engage to the merchants here
            that they will indemnify them from all that shall
            fall out.                             --Sir W.
                                                  Temple.
      [1913 Webster]

   2. To make restitution or compensation for, as for that which
      is lost; to make whole; to reimburse; to compensate.
      --Beattie.
      [1913 Webster]