Types of Indemnity Clauses Indemnity clauses vary in their scope and impact. Here are the three main types: 1. BROAD FORM INDEMNITY
Broad form indemnity clauses are the most onerous. They require one party to take full responsibility for all liabilities, even when the other party is entirely at fault. In these cases, a party could be held liable for issues beyond its control. General Contractors often put clauses like this in their subcontracts. The goal is to make someone else responsible for anything that could go wrong on a job. Example Broad Form Clause (Often Unenforceable): “The Installer agrees to indemnify and hold harmless the General Contractor for any and all claims, including those arising from the General Contractor’s sole negligence or willful misconduct.” Most states will not enforce broad form indemnity clauses because they are considered unfair. 2. INTERMEDIATE FORM INDEMNITY Intermediate form indemnity clauses are more balanced but still carry significant risk. They require one party to accept responsibility for liabilities unless the other party is solely at fault. If both parties share responsibility, the indemnitor must pay it all. On a large construction project, a general contractor might use an intermediate form indemnity clause to force all its subcontractors to pay for damages caused by just one of them. Example Intermediate Form Clause: “The Installer agrees to indemnify and hold harmless the General Contractor for any claims, damages, or losses arising out of or connected with the Installer’s work, except to the extent such claims result from the sole negligence of the General Contractor.” Intermediate indemnity clauses are enforceable in most states. It is essential to watch for terms like “sole negligence” to understand the scope of your liability. 3. LIMITED FORM INDEMNITY Limited form indemnity clauses restrict liability to situations where the indemnitor is directly responsible, ensuring that each party is accountable for only its own actions. Example Limited Form Clause: “The Installer agrees to indemnify and hold harmless the General Contractor for claims, damages, or losses caused by the Installer’s negligence or willful misconduct.” “ Signing a contract without reviewing its indemnity provisions can leave you financially exposed. Poorly drafted or ambiguous clauses often result in costly litigation, financial strain, or gaps in insurance coverage.”
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