indemnity and insurance contract requirements...the indemnity shall include, without limitation,...

© 2018 Tressler LLP

Presented by:

Indemnity And Insurance Contract Requirements

August 3, 2018

STICO MutualTressler LLP


» Todd M. Rowe› Tressler LLP attorney

» Colin Donovan› President of STICO Mutual

Introductions

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You need to execute an agreement with your customer to begin work on a project.

› Contract may be supplied by customer› Language may be slanted to protect the

customer› You may have concern about losing

work to competitor if you question any of the language

› Need to get started on the project quickly

› You have worked with this customer many times before this project

› Don’t forget about pushing the problem down to vendors as well.

The following presentationwill at least make you awareof what you are agreeing toand how your insurancepolicy can assist you.

o Indemnity Language

o Other Provisions

o Insurance Requirements

The Problem

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IndemnificationTo the fullest extent allowed by law, the CONTRACTOR agrees to defend,protect and hold OWNER, its subsidiaries, parents, affiliates and theirrespective agents, trustees, directors, officers, employees, servants andsubcontractors (collectively, “Indemnitees”) harmless from and against anyand all Liabilities which any of the Indemnitees may suffer, incur, beresponsible for or pay as a result of or in connection with property damage,personal injury or death or otherwise, in each case arising out of, inconnection with or incidental to: (i) the Work performed under thisAgreement; (ii) the negligence (act or omission) of the CONTRACTOR orany of its employees or anyone else for whom it is responsible in law(whether in relation to the Products or Service or otherwise); and (iii) anybreach by the CONTRACTOR or by any of its employees of anyone elsefor whom it is responsible at law or under this Agreement, or any provisionof this Agreement. The indemnity shall include, without limitation, costs,expenses and attorney’s fees occasioned by said liabilities, as well as thefull amount of any judgment rendered or compromise made, plus courtcosts and interest.

The Issue: Indemnification Provisions

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http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.sony.net/&ei=WPjTVJWvC5WuyAT9tILoCA&bvm=bv.85464276,d.aWw&psig=AFQjCNEW31WRp1ERSynoUk-N_Od3tYGcQw&ust=1423264201127933

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.sony.net/&ei=WPjTVJWvC5WuyAT9tILoCA&bvm=bv.85464276,d.aWw&psig=AFQjCNEW31WRp1ERSynoUk-N_Od3tYGcQw&ust=1423264201127933


To the fullest extent allowed by law, the CONTRACTOR agrees todefend, protect and hold OWNER, its subsidiaries, parents, affiliatesand their respective agents, trustees, directors, officers, employees,servants and subcontractors (collectively, “Indemnitees”) harmlessfrom and against any and all Liabilities which any of the Indemniteesmay suffer, incur, be responsible for or pay as a result of or inconnection with property damage, personal injury or death orotherwise,

Non Legal: You/Contractor are taking liability that may belong to the Customer/Owner.

Indemnification Provisions: What Are You Doing?

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in each case arising out of, in connection with or incidental to: (i) theWork performed under this Agreement; (ii) the negligence (act oromission) of the CONTRACTOR or any of its employees or anyoneelse for whom it is responsible in law (whether in relation to theProducts or Service or otherwise); and (iii) any breach by theCONTRACTOR or by any of its employees of anyone else for whomit is responsible at law or under this Agreement, or any provision ofthis Agreement.

Non-Legal: You/Contractor is not taking all liability from the Customer/Owner.Only certain types of liability.

Indemnification Provisions: What Are You Indemnifying For?

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The indemnity shall include, without limitation, costs, expenses and attorney’s fees occasioned by said liabilities, as well as the full amount of any judgment rendered or compromise made, plus court costs and interest.

Non-Legal: When You/Contractor takes Customer’s/Owner’s liability, it will only take over certain costs.

Indemnification Provisions: What Amounts Are You Indemnifying For?

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Anti-Indemnity Statutes

Indemnification

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CIVIL LIABILITIES(740 ILCS 35/) Construction Contract Indemnification for Negligence Act

With respect to contracts or agreements, either public or private, for the construction, alteration, repair or maintenance of a building, structure, highway bridge, viaducts or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise or agreement to indemnify or hold harmless another person from that person's own negligence is void as against public policy and wholly unenforceable.(Source: P.A. 77-1629.)

• Impact of Choice of Law provision.


Cancellation/Termination“Buyer may at its election…terminate this order...for cause if

Seller (a) fails to deliver the goods or perform the services in accordance with the schedule specified in this order (for any reason whatsoever)…In the event of such termination, Buyer shall not be liable to Seller for any amount and Seller shall be liable to Buyer for all damages sustained by Buyer by reason of the default that gave rise to termination.”

Non Legal: The CONTRACTOR is responsible to the OWNER for any costs incurred as a result of delays. Further, the OWNER may cancel the order entirely for this reason and not pay the CONTRACTOR a cent.

Other Provisions

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Cancellation/Termination“Buyer may cancel this purchase order in whole or in part

for its own convenience, and for any reason or no reason, at any time upon written notice to Seller.”

Non Legal: The OWNER may cancel the contract at any time for its own convenience. Depending on the subsequent language, the CONTRACTOR may receive a pro-rata share, or less-than-pro-rata share, of the contract value.

Other Provisions

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Responsibility for Subcontractors“The CONTRACTOR agrees that it is fully as responsible to

[OWNER] for the acts and omissions of its Subcontractors, and of persons either directly or indirectly employed by them, as the CONTRACTOR is for the acts and omissions of persons directly employed by it. Nothing contained in the Agreement shall create any contractual relation between any Subcontractor or supplier and [OWNER].”

Non Legal: The CONTRACTOR is responsible for the acts of its subcontractors. Do they have insurance? Are you named as an Additional Insured on their insurance?

Other Provisions

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InsuranceThe CONTRACTOR shall maintain, at its expense, the following types of insurance, issued by companies acceptable to OWNER:(a) Workers’ Compensation Insurance, including occupational diseases, providing for

the payment of benefits by federal and state law in each state wherepersons employed by CONTRACTOR will be performing Work under thisAgreement, and Employers’ Liability Insurance with a minimum limit of$1,000,000.

(b) Commercial General Liability Insurance, written on an occurrence basis, andproviding coverage with a combined single limit for Bodily Injury Liability andProperty Damage Liability of $3,000,000 per occurrence and in the aggregate.

(c) Sudden and Accidental Pollution Liability coverage protecting againstenvironmental impairment or discharge of hazardous substances into the air, soilor water with a minimum limit of $3,000,000 per occurrence.

Insurance Requirements

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Insurance RequirementsCGL Basics

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What does my CGL cover?

What are the various coverage parts?

What risks are uninsurable?

What if customer asks for something that is uninsurable?


Commercial General Liability Policy

› Who Is An Insured? Not OWNER under CONTRACTOR’S CGL.› Adding OWNER as Additional Insured to meet insurance

requirements.› “Other Insurance” Provisions › Certificates of Insurance


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Insurance RequirementsAdditional Insured Endorsement

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Insurance RequirementsAdditional Insured Endorsement

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Insurance RequirementsCertificate of Insurance

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Commercial Umbrella Liability Policy» Excess Coverage: Insurer agrees to pay “sums in excess of the amount payable

under the terms of any claims made Underlying Insurance, and in excess of anyRetained Amount set forth in the Schedule…

» Umbrella Coverage: Insurer agrees to pay “sums in excess of the amountpayable under the terms of any occurrence based Underlying Insurance asstated in the Schedule of Underlying Insurance as stated in the Schedule ofUnderlying Insurance…


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Questions?

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