How to Use Indemnification

Indemnification is a tricky topic. In essence, one party agrees to compensate another party for loss or damage. It's commonly used in the insurance field and requires the appropriate agreements and endorsements in order for all parties to have adequate protection. Here are a few things to look for if you're about to enter into an indemnification agreement with another party.

Difficulty:

Challenging

Instructions

1. Make the indemnification request known at the time of signing the contract. If you're entering into an agreement with a subcontractor or a contractor, make the need for indemnification wording known upfront. Provide them with a copy of your indemnification requirements.

2. Secure a copy of the certificate of insurance evidencing indemnification. Get a signed copy of the contractor's certificate of insurance showing the indemnification agreement as agreed upon in the contract.

3. Review a copy of the indemnification endorsement. More than just a certificate of insurance, it's best to see a copy of the actual endorsement. Certificates of insurance are evidence the actual coverage. However, mistakes can be made on certificates. Put your mind at ease by having an actual copy of the indemnification wording from the contractor's policy.

4. Submit the indemnification endorsement with the claim. If a claim arises for which you are to be indemnified, send a copy of the indemnification agreement with the claim paperwork. It's written, documented proof that you're indemnified in the event of negligence on the part of the other party.

Tips & Warnings

• The subject of indemnification can be a confusing one. Before you sign any contract, ask both your attorney and your insurance agent to review the indemnification wording.

• If you are the party asked to provide indemnification protection, you should review the wording thoroughly, as you don't want to legally agree to indemnify something out of your control.