Businesses and individuals enter into indemnification or hold harmless agreements to protect one party of the transaction from the risks or liabilities created by the other party of the transaction.
To defray the costs in defending against claims and lawsuits, insured parties routinely turn to their insurance company when the other party to the transaction seeks indemnity pursuant to an indemnification agreement.
These demands for indemnity are often fact intensive based on specific contract language and can lead to potential coverage issues.
In these claims for indemnity, Courts from various states have been asked to assess whether indemnity is owed under substantially the same indemnification agreement language.
Despite the similar language, Courts from different states have reached different conclusions. Thus, both insureds and insurers are cautioned that while the facts and terms of indemnification provisions guide the conversation on whether indemnification is owed, the state law used to interpret these provisions will often dictate the outcome of that conversation.