30 day grace

Sample Indemnity/Insurance Clause

Posted: 2018-01-13 23:28

Finally, the consequential damages waiver and/or limitation of liability clause will also impact the ability of the company to obtain compensation from the service provider for any first-party losses sustained by the company. [Remember, the indemnity provisions typically only address what happens when another person or organization (other than the service provider) brings a claim against the company.] So, if you want the service provider to be liable to you for first-party loss (., lost profits, extra expenses, cost to restore lost/corrupted data, etc.), you need to make sure they are not excluded by the consequential damages waiver clause or overly limited by the limitation of liability clause.

Insurance, Indemnification, and Limitation of Liability

Also, all the good work that can go into such provisions are going to be for naught if the contract contains any type of consequential damages waiver and/or limitation of liability clause that does not except the service provider''s indemnity obligations to the company for third-party claims. These provisions can be found in separate clauses, or in one and the same clause, in a contract, but they deal with two different, albeit related issues.

Construction Works | MBA Insurance Services

An easement for public access is a familiar example of access granted in connection with a conservation project, whether the access easement is granted by separate document or embedded within a grant of conservation easement. Samples of indemnity provisions in this context are contained in the Model Trail Easement and Commentary and Model Grant of Conservation Easement and Commentary published by the Pennsylvania Land Trust Association.

Contracts_Insurance_and_ | Indemnity

Organizations may raise revenues (and develop good will with the public) by allowing use of their property for special events such as weddings, conferences and recreational or athletic events. Sometimes an organization&rsquo s supporters are willing to make their properties available for a special event such as a fundraiser or other celebration sponsored by the organization. The parties to a reservation or other agreement pertaining to a special event, whether the landowners or the event sponsors, are well advised to delineate responsibilities carefully and review risk management provisions with insurance carriers.

Indemnity Provision - Kirschenbaum & Kirschenbaum, .

For example, Owner hires Contractor to erect a second building on Owner&rsquo s site, and their contract requires Owner to be an additional insured under Contractor&rsquo s commercial general liability policy. In the course of the project, Owner&rsquo s existing first building is damaged. Owner may think that its additional insured status allows it to submit a claim to Contractor&rsquo s CGL insurer and get paid for the damage. Probably not. It&rsquo s a commercial general liability policy, covering the insured&rsquo s liability to third parties. Being an additional insured can allow Owner to be covered against a third party&rsquo s claim for injury or damage, such as an injury suffered by a subcontractor&rsquo s employee. There may still be an avenue for Owner to have Contractor&rsquo s CGL policy pay for the damage to Owner&rsquo s property. If the facts support an allegation that the damage was caused by an act or omission of Contractor, Owner can demand or sue Contractor, and then the CGL carrier may pay for Contractor&rsquo s liability for damaging Owner&rsquo s first building. But that has nothing to do with Owner&rsquo s status as an additional insured.

Indemnity & insurance provisions in construction contracts

Indemnity insurance  is a way for a company (or individual) to protect itself against indemnity claims. This insurance protects the holder from having to pay the full sum of an indemnity, even if the holder is at fault for the cause of the indemnity in the first place. Many companies make indemnity insurance a requirement, as lawsuits are common. Everyday examples include malpractice insurance, which is common in medical fields, and errors and omissions insurance  (E& O), which protects companies and their employees against claims made by clients and applies to any given industry. Some companies also invest in deferred compensation indemnity insurance, which protects money they expect to receive in the future.

Entire contract clause - Insurance Glossary

While insurance is often perceived as a backstop for indemnity, there is no hard-and-fast requirement that a party first pursue indemnification. Rather, in certain circumstances, the indemnitee can bypass the indemnitor and seek protection directly from the insurer. Three such circumstances were mentioned above - additional insured status under a CGL policy, SDI, and surety bonds.

However, these traditional policies are problematic when it comes to addressing the unique risks associated with e-business activities. If you look at the previous article in this column, traditional general liability insurance policies cover less and less e-business risks. The service provider''s general liability insurance might not respond to third-party claims for invasion of privacy when it comes to theft of private information (where was the "publication or utterance"?), damage to/corruption of data (now expressly excluded by traditional general liability coverage), pure financial loss (typically not covered even by traditional general liability coverage), and a host of the intellectual property risks posed by e-business activities.

An act of indemnity protects those who have acted illegally from being subject to penalties. This exemption typically applies to public officers, such as police officers or government officials, who are compelled to break the law in order to carry out the responsibilities of their jobs. Often, such protection is granted to a group of people, who committed an illegal act for the common good, such as the assassination of a known dictator or terrorist leader.

The proliferation of e-business activities is having an impact on legal liability and first-party risks faced by companies, whether they know it or not. The purpose of this article is to identify some of the ways these risks can be managed by way of indemnity and insurance provisions in contracts. Due to space limitations, this article will touch on just some of the important issues to consider. (More information on this topic will be provided at the Tech-eRisk Seminar.)

Unlike typical indemnity provisions which can, subject to legislative limitations, provide protection against almost any loss bearing a sufficient connection to the indemnitor s activities, the coverage provided by commercial general liability ( CGL ) policies are generally limited to bodily injury and property damage, and numerous exclusions further limit the protection provided. As an example of the differing scope between a typical indemnity provision and the insurance provided by a CGL policy, a contractor will likely be indemnified by an at-fault subcontractor for a delay claim brought by an owner, but it is unlikely that the contractor would have insurance coverage for that same claim.

Regardless of how the contract is set up with respect to the indemnity provisions (., whether four different indemnity provisions or two), the key point is that the risk manager or contracts person reviewing the contract must understand how the contract addresses indemnification for third-party claims for intellectual property infringement, privacy, pure financial loss, and bodily injury and property damage (including data). Those provisions must be reviewed and negotiated to ensure that the risks for which the company wants to be defended and indemnified by the service provider are addressed.

The ability to seek performance directly from an insurer (or surety) has significant benefits. For one, it increases the number of potential sources of funds. Thus, if the contractor is insolvent or has taken a very hard position on the claim, there is the possibility of a solvent, more malleable party from whom to recover. And, as discussed below, it is more likely that the insurance will present a better source of recovery.

The good news, you may think, is that at least most indemnity provisions are backed up by insurance coverage. This is true, but, unless you have language in your agreement that requires all indemnity obligations to be covered by insurance, the insurance coverage that you have will probably not cover all of your indemnity obligations. The reason is that the insurance agreement is separate from the indemnity provision, and insurers agree to provide coverage only as stated in the insuring agreement, not as stated in your indemnity provision.

In traditional contracts, the company would simply require standard insurance policies to ensure that the service provider had the financial wherewithal to carry out its indemnity obligations under the contract, and to otherwise shift risks under the contract to the service provider''s insurers. A typical contract would require the service provider to maintain workers compensation and employers liability, automobile liability, commercial general liability, and perhaps also foreign general liability and/or umbrella liability.

Indemnity is compensation for damages or loss, and in the legal sense, it may also refer to an exemption from liability for damages. The concept of indemnity is based on a contractual agreement made between two parties, in which one party agrees to pay for potential losses or damages caused by the other party. A typical example is an insurance contract, whereby one party (the insurer or the indemnitor) agrees to compensate the other (the insured or the indemnitee) for any damages or losses, in return for premiums paid by the insured to the insurer.

With those basic concepts in mind, think about the risks that arise out or relate to the contract. Take the time to imagine nightmare scenarios as well as other events that might be less devastating but more likely to occur. Then think about who should bear each of those risks. Do the insurance, indemnification, and limitation of liability provisions allocate the risks appropriately? If not, the parties should consider carefully negotiating to reach agreement on the risk allocation and then drafting or revising the provisions necessary to accomplish their mutual intentions. These issues can be as important as price and other material terms in the contract.

That is not to say, however, that insurers are always more willing to pay. Various of the many parties involved in significant construction projects may be insured by non-admitted insurers with differing levels of regulatory scrutiny and/or concern for their reputation. Insurers claims positions can also be driven by factors affecting the company or industry as a whole, rather than just the merits or economics of an individual claim. Conversely, contractors are often very mindful of their reputation within the industry and may have a strong desire to be perceived as standing behind their work and, therefore, may be willing to pay even when the merits of a particular claim do not necessarily warrant it.

Regulatory scrutiny on insurers is focused heavily on solvency, and insurers as a whole therefore are generally likely to be able to pay claims. The differing nature of insurers and contractors respective businesses also provides vastly different incentives - while an insurer that pays a claim is merely doing what it was expected to do, payment of a claim by a contractor can be perceived as an admission that it did something it should not have done. Moreover, between the insurers obligations of good faith and fair dealing to their insureds and more nuanced differences in how courts interpret insurance policies versus contractual indemnity provisions, the law also provides insurers with more incentives to pay than contractors.

One option for addressing that risk is the surety bond. While categorically different than insurance policies, surety bonds can offer protection against, among other items, pure delay and other risks generally not covered by CGL policies. Protections may be limited by the terms of the bond, however, and even when expressly encompassed within the scope of the bond there can be substantial delays and litigation required to effectuate performance. That is not always the case, however, and sureties often provide timely performance under a payment bond claim or when hiring a completing contractor.

«Insurance policy indemnity contract provision protection» in images. More pictures on the theme «Insurance policy indemnity contract provision protection».