{"id":751443,"date":"2015-05-14T06:13:47","date_gmt":"2015-05-14T12:13:47","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=751443"},"modified":"2015-05-11T10:14:58","modified_gmt":"2015-05-11T16:14:58","slug":"indemnity-clauses-what-do-they-mean-and-what-should-you-be-looking-for","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/indemnity-clauses-what-do-they-mean-and-what-should-you-be-looking-for\/","title":{"rendered":"Indemnity Clauses\u2014What do they mean, and what should you be looking for?"},"content":{"rendered":"

Craig Martin |\u00a0Construction Contractor Advisor | May 4, 2015<\/p>\n

It seems that every construction contract now-a-days, contains an indemnity clause.\u00a0 Contractors should be reviewing these indemnity clauses very carefully to understand the potential scope of an indemnity obligation and your opportunity to negotiate changes.<\/p>\n

What is an indemnity Clause?<\/p>\n

An indemnity clause transfers risk from one party to another.\u00a0 When a contractor signs an indemnity agreement, it is agreeing to pay for damages for which another party could be liable.<\/p>\n

What is a Typical Indemnity Clause?<\/p>\n

The AIA A-201 contains a common indemnity clause:<\/p>\n

3.18.1 To the fullest extent permitted by law the Contractor shall indemnify and hold harmless the Owner, Architect, Architect\u2019s consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys\u2019 fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself), but only to the extent caused by the negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity that would otherwise exist as to a party or person described in this Section 3.18.<\/p>\n

What are the Key Provisions to an Indemnity Clause?<\/p>\n

Scope: \u201cindemnify and hold harmless from and against claims, damages, losses and expenses, including attorneys\u2019 fees\u201d\u2014this language may make the contractor responsible to pay for all damages arising out of the incident.<\/p>\n

Basis: \u201cprovided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself)\u201d\u2014this language limits the situations covered to which indemnity applies, in essence eliminating claims to replace the contractor\u2019s work itself. This limitation is intended to follow applicable insurance coverage.<\/p>\n

Limit: \u201cbut only to the extent caused by the negligent acts or omissions of the Contractor, . . . regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified\u201d This language limits the indemnity obligation to the negligent acts of the contractor, but also makes clear that negligence by a party indemnified will not eliminate the contractor\u2019s indemnity obligation. In essence, if the contractor and the party indemnified are both negligent, the contractor will still have to indemnify the other party.<\/p>\n

Negotiating Changes to Indemnity Clauses<\/p>\n

Knowing full well that some upstream contractors may not negotiate indemnity obligations, here are some negotiating tips.<\/p>\n

Make the Indemnity Obligation Mutual.<\/p>\n

Contractor will indemnify [upstream contractor] for all claims, but only to the extent caused by its negligence. [Upstream Contractor] will indemnify Contractor for all claims, but only to the extent caused by its negligence.<\/p>\n

Limit Indemnity to Insurance Limits.<\/p>\n

Contractor\u2019s liability under this provision shall not exceed the limits of insurance coverage required to be carried by the Contractor.<\/p>\n

Limit Indemnity to Actual Insurance Coverage.<\/p>\n

Contractor\u2019s liability under this provision shall not exceed the amount of insurance coverage actually paid by insurer.<\/p>\n

Limit Bodily Injury Claims to Workers\u2019 Compensation<\/p>\n

Contractor\u2019s liability for bodily injury claims shall be limited to the amount payable by or for the Contractor under applicable\u00a0workers\u2019 compensation act.<\/p>\n

Take Away: Understanding indemnity clauses is crucial to limiting your liability under these clauses. Having a better understanding of these clauses may allow you to better negotiate a limit to\u00a0your potential liability.<\/p>\n

via Indemnity Clauses\u2014What do they mean, and what should you be looking for? – Construction Contractor AdvisorConstruction Contractor Advisor<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Craig Martin |\u00a0Construction Contractor Advisor | May 4, 2015 It seems that every construction contract now-a-days, contains an indemnity clause.\u00a0 Contractors should be reviewing these indemnity clauses very carefully to understand the potential scope of an indemnity obligation and your opportunity to negotiate changes. What is an indemnity Clause? An indemnity clause transfers risk from… Continue reading Indemnity Clauses\u2014What do they mean, and what should you be looking for?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9,4],"tags":[224,8263],"class_list":["post-751443","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","category-construction-defects","tag-construction-contract","tag-indemnity-clauses","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nIndemnity Clauses\u2014What do they mean, and what should you be looking for? - Advise & Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/indemnity-clauses-what-do-they-mean-and-what-should-you-be-looking-for\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Indemnity Clauses\u2014What do they mean, and what should you be looking for? - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Craig Martin |\u00a0Construction Contractor Advisor | May 4, 2015 It seems that every construction contract now-a-days, contains an indemnity clause.\u00a0 Contractors should be reviewing these indemnity clauses very carefully to understand the potential scope of an indemnity obligation and your opportunity to negotiate changes. 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