What is defense and indemnity?
Defense and indemnity clauses are routine devices used in construction contracts to shift responsibility for potential risks from one project participant to another. The terms defend and indemnify often appear in the same clause, but they are each typically understood to impose different obligations.
What is the difference between the duty to defend and the duty to indemnify?
The “duty to indemnify” means the insurer’s duty to pay the claim, by funding a settlement or paying a judgment against the insured. Unlike the duty to defend, which is typically determined by the policy and petition, the duty to indemnify is based on any and all information developed in the underlying suit or claim.
What does it mean to indemnify someone?
To indemnify another party is to compensate that party for losses that that party has incurred or will incur as related to a specified incident.
Does indemnification include defense?
The Duties to Defend And Indemnify – Related But Distinct Most indemnity provisions, however, also include a related duty to defend, which requires the indemnitor to defend the indemnitee against covered third-party claims and potentially first party claims depending on the language included in the provision.
What is indemnify in law?
Definition: Indemnity means making compensation payments to one party by the other for the loss occurred. Description: Indemnity is based on a mutual contract between two parties (one insured and the other insurer) where one promises the other to compensate for the loss against payment of premiums.
What is a tender of defense and indemnity letter?
Tenders of defense and indemnity are tools that parties can. use to offload defense costs and attorneys’ fees (tenders. of defense), or offload payments for liability including. settlement or verdict (tenders of indemnity), to another. party.
Is hold harmless the same as indemnity?
The main difference in this case is that “hold harmless” may require a party to protect against actual losses as well as potential losses while indemnification protects against actual losses only.
What does indemnity mean in simple terms?
Definition of indemnity 1a : security against hurt, loss, or damage. b : exemption from incurred penalties or liabilities.
Who controls defense indemnity?
In general terms, indemnity is an obligation by one party to make another party whole for a loss, damage, or liability the other party has incurred. – The party obligated to pay is the indemnitor.
Is hold harmless the same as defend?
What is indemnity and hold harmless clause?
For example, the term “indemnify” is used when a business hopes to protect itself against claims from a customer’s error, while a hold harmless clause prevents a business from taking any responsibility for a customer’s mistake. Experts recommend that both terms be included for maximum protection.
Why do you need an indemnity?
An indemnity in a contract is a promise by one party to compensate the other party for loss or damage suffered by the other party during contract performance. An indemnity is also known as a ‘hold harmless’ clause as one party agrees to hold the other party harmless.
What does tender mean in litigation?
Tender is to unconditionally offer money or performance to meet an obligation. The term most commonly arises in the context of the contractual sale of goods.
What is a tender in litigation?
One of the most powerful tools in a defense counsel’s repertoire is the tender letter. Tendering a defense involves assigning that client’s defense, and the costs associated with that defense, to another party pursuant to a contract or other agreement. The tender letter is the formal mechanism by which that happens.
What does it mean to indemnify in insurance?
Indemnification is an agreement where your insurer helps cover loss, damage or liability incurred from a covered event. Indemnity is another way of saying your insurer pays for a loss, so you don’t have financial damages.
What is the difference between indemnify defend and hold harmless?
What is hold harmless vs indemnify?
What is the purpose of an indemnity clause?
An indemnification clause may allow: The indemnified party to recover certain types of losses, such as attorney’s fees, which are not typically recoverable under a common law cause of action. The indemnifying party to reduce its liability by incorporating: Liability cap.