Indemnity agreements are widely used in the construction and property management industries, and are “insured contracts” under the standard Broad Form CGL policy. In the District of Columbia, such agreements can operate not only to protect the indemnitee from vicarious liability, but also to shift liability for the indemnitee’s own negligence to the indemnitor.
In our experience, the effect of these agreements is not always fully appreciated. Clients are advised to ensure that the potential risks and benefits of these agreements are well recognized by their underwriting and claims departments. Underwriters should be vigilant to avoid or account for potential hidden exposures under contractual liability coverage. Conversely, when the insured is in a position of relative bargaining strength, effective use of indemnity agreements and insurance requirements can be a powerful risk management tool.
By the same token, contractual indemnity obligations should be routinely explored in the earliest phase of the claims review process. Substantial savings may be achieved through stringent and persistent demands upon contractual indemnitors and their liability carriers.
This article provides an overview of District of Columbia law on contractual indemnity, with a particular focus on cases in which the indemnitee seeks to shift liability for his own negligence. Readers are advised to consult with an attorney to determine the application of these principles in any specific case. READ MORE