An indemnity basket is the minimum aggregate dollar amount of warranty and indemnity claims the buyer has to accumulate before they can recover anything from the seller. It is the small-claim filter that sits between the warranty schedule and the liability cap.
Technically, it is a contractual threshold below which warranty and indemnity claims are aggregated but not yet payable. Once the aggregate crosses the basket, recovery is governed by whichever of two structures the agreement uses.
There are two flavours: a true deductible (the buyer recovers only the amount above the basket, like an insurance excess), and a tipping basket (once the threshold is crossed, the entire aggregate becomes recoverable from dollar one). The two look similar on the page and are very different in a claims scenario. The seller wants a true deductible. The buyer wants a tipping basket.
The basket interacts with the rest of the architecture. Materiality qualifiers on individual warranties function as a soft basket layered on top, and certain warranties (typically tax, title, and capacity) are often carved out of the basket entirely so that any claim under them is recoverable from the first dollar.
What you as a seller should push back on: tipping basket structures (push for a true deductible), low per-item de minimis thresholds that allow small items to aggregate into the basket, and broad carve-outs from the basket that effectively neutralise its filtering function across most of the warranty schedule.