Joint Liability and Indemnity

1
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 liability
• Joint liability is extremely common in
  construction- each party pays according to their
  proportion of cause (arbitrator assigns
  percentage)

2
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

3
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 AND
• Each tortfeasor is also individually liable for
  all damages suffered should other parties not be
  able to pay (severability)

4
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

5
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

6
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

7
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