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Indemnity clause updated September 18, 2017

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Indemnity clause updated
September 18, 2017
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Indemnity clause updated 
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    I've tried to explain the degree of scrutiny courts give the indemnity clause [the other protective provisions also], but I just can't do it justice.  The courts will nit pick each word, torturing the sentence, until the desired result is achieved.  Usually the desired result is denial of indemnity.  That's not what you want when it's you moving to enforce the Indemnity Clause in your contract.  It's not what your insurance carrier wants either, especially since with claims within policy limits it's your carrier who receives all the benefits of the indemnity clause [other than your deductible].  
    The Standard Form Agreement indemnity clause was clear as a glass of water.  The subscriber is required to indemnify against all claims, under all circumstances, including legal fees, etc.  So what part of the provision isn't clear enough?  Fortunately the indemnity provision in the Standard Form Agreement has always been enforced as far as I know.  I know it's been enforced in all the cases I handled. But we did have challenges to whether the order for indemnity should wait until the underling lawsuit was concluded.  I have always overcome the challenge, but it was a battle.  So why did the indemnity clause need updating?
A recent court decision reviewed an indemnity provision that discussed when a party is entitled to indemnity and defense costs.  The options are:
    It should be obvious that a comprehensive indemnity clause, the one we have used in the Standard Form Agreements for a long time, should cover immediate indemnity, defense costs advanced.  But why take any chances, so the Indemnity Clause has been updated.  The only way it may not be enforced is if the law in your jurisdiction prohibits indemnity [like PA and perhaps other states].  
    The good news is that the 2018 updates to the Standard Form Agreements have all been made up to date.  So no need to wait to update your contract; the agreements are all updated.
The indemnity clause is one of the core protective provisions.  Contract provisions are not read in isolation, but read together with other contract provisions so that courts can interpret the intent of the parties to the contract [who of course are in sharp disagreement at that point].  It's important to have all the various provisions that insulate and limit liability, and all the provisions should support the other provisions.  Liability issues quickly overshadow all other issues when you are facing a massive claim that exceeds your insurance coverage and threatens to consume all your business [and maybe personal] assets. 
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com