Joint Liability and Indemnity

Several people or companies may contribute to one loss.Each party will pay damages in proportion to the amount of their liabilityJoint liability is extremely common in construction- each party pays according to their proportion of cause (arbitrator assigns percentage)

Joint Liability and Indemnity

Claim that the “most responsible” should pay is not a valid defense in U.S.

Indemnity and contribution define the terms of the settlement Indemnity action- bringing in another party

believed partly liable for some of the damages Contribution action- one party has already paid

and seeks recovery or reimbursement from another party believed partly liable

Joint Liability and Indemnity

Insurance companies represent liable parties, but are not parties to the suit.

Joint and severable liability- each tortfeasor is jointly liable with other

tortfeasors for the total damages ANDEach tortfeasor is also individually liable for all damages suffered should other parties not be able to pay (severability)

Joint Liability and Indemnity

Responsibility for contributory actions is on the other tortfeasors, not the damaged party

Law on settlement by a jointly liable party varies by jurisdiction- some make non-settlers pay more, others will use settlement as the anchor for other party damage assignments

Joint Liability and Indemnity

Indemnity clause- agreement that one party will bear all the risks for various events (wind, fire, risk, etc.)Types of clauses Limited- limited form indemnity clause restatement of

the law- each party responsible for their share Intermediate form indemnity clause- one party will pay

for all damages if it is partly responsible (makes insurance easier and cheaper)

Broad from indemnity- one party will pay for all damages even if they have not caused any of the damages. Illegal in many states- under review

Joint Liability and Indemnity

Accepting liability (indemnifying others) is financially risky. Need to make sure insurance coverage is in place and high enough to cover potential loss

Insurance policy will usually have a clause preventing you from from indemnifying others without notification. Will pay more

Joint Liability and Indemnity

Additional insured- extends your insurance coverage to another party. Same effect as broad form indemnity, but not legally as troubling. Usually applies to specific acts or assets (like your car)

Insurance and broad form indemnity apply sometimes to officers of the company