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Insurance Allocation Strategies 2013
October 28-29, 2013
final
Impact of Indemnity Agreements Between
Insured & Other Parties
Gregory L. DillionNewmeyer & Dillion LLP
The Speakers
Andy MillerClyde & Co US LLP
Debra R. PueblaSinnott, Puebla, Champagne & Curet, APLC
Brian DeSotoGreat American Insurance Group
What’s the point of indemnity agreements?
◦ Allocate loss
◦ Share (or shift) pain
◦ Protect the party to be indemnified – the “indemnitee” – against specified liability
Why Indemnity?
Developer designs and sells automated litigation calendaring software for law firms. Firm, a customer of Developer, purchases the software from Developer. Owing to a design flaw, Developer’s software incorrectly calendars a deadline which Firm misses, leading to entry of a default judgment against Firm’s Client. Client’s retention agreement with Firm specifies that Firm will employ both manual and automated calendaring systems. Client sues Firm, which tenders suit to Developer under the Indemnity provision of Developer’s contract with Firm: Developer shall indemnify Firm from and against any and all claims to the extent that they arise out of or are in any way connected with any negligent act or omission by Developer. Developer agrees, at his own expense, and upon written request by Firm, to defend any suit, action, or demand brought against Firm on any matter encompassed by this indemnity provision. Further, Developer warrants that Firm shall be named as an insured under Developer’s policies of commercial general liability and professional liability insurance affording limits of no less than $1 million per claim, loss, or occurrence.
The Scenario:
Indemnity Agreement1. Is there one?
2. If so, what does it say? (a) Who is the indemnitor?(b) Who is the indemnitee?(c) What is the scope of the indemnitor’s obligation to
defend? Are there conditions/limitations?(d) What is the scope of the indemnitor’s obligation to
indemnify? Are there conditions/limitations? (e) Are there cross-indemnification provisions?(f) Are there any other risk transfer provisions?
1. Does the indemnitee have additional insured rights under the indemnitor’s primary and/or excess policies?
(a) If so, what are those rights?(b) Are the rights as an indemnitee greater than
those of an AI?(c) If the AI carrier defends the indemnitee as an
insured, does it have the ability to share in that obligation with anyone? Can the indemnitee simultaneously pursue rights as indemnitee and AI?
Additional Insured Provisions
1. Does it matter if both the indemnitor and the indemnitee’s direct policies are primary?
2. Does it matter if the indemnitee is an AI under indemnitor’s policies?
Does An Indemnity Agreement Supersede Policy Language?
Questions
Gregory L. Dillion Newmeyer & Dillion LLP 949-854-7000 – [email protected]
Andy Miller Clyde & Co US LLP 415-365-9825 – [email protected]
Debra R. Puebla Sinnott, Puebla, Campagne & Curet, APLC 213-996-4200 – [email protected]
Brian DeSoto Great American Insurance Company Phone Email
Speaker Contact Info