Construction involves risk. The opportunity for injury or property damage resulting from construction operations is great and the list of potential plaintiffsconstruction workers, visitors to the site, passersby, owners of neighboring propertiesis long. More often than not, an owner has little or no control over construction operations occurring at its property and is not in a position to manage construction site safety or to prevent accidents. The result is that owners often find themselves defendants in actions stemming from accidents that they had no hand in causing and could not reasonably have prevented. Although the owner likely has liability insurance that is designed to defend and to indemnify itself against such claims, it will likely have to pay a deductible or self-insured retention, and may find itself paying higher insurance premiums in the future, and its potential liability may exceed the limits of the applicable policy. The owner may also incur liability for things that its insurance will not cover, such as municipal fines or third-party claims for pure economic loss unrelated to bodily injury or property damage. How does the owner protect itself?
Enter the indemnification clause. Indemnification clauses are nearly ubiquitous in construction contracts, yet they are too often misunderstood, and sometimes misused. Indemnification clauses, if not drafted correctly, may result in unintended consequences, may not provide the protection for which they were designed, and in some instances, may be entirely void. Because of these inherent pitfalls, this article is intended to provide practical guidance to those who draft and review indemnification provisions for use in construction contracts.
Why Indemnify?
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