Short answer
Whether an indemnification clause is covered by professional liability insurance depends on your policy wording and the facts of the claim. Removing “defend” language is a good step, but reviewers also look at what triggers the promise, how fault is shared, which costs are included and who is protected. Ask your agent to have the insurer review the clause, and take the legal questions to your attorney.
Why do insurers read an indemnification clause closely?
Professional liability is generally built to respond to claims arising from negligent professional services. Many policies exclude liability taken on by contract beyond what the law would impose anyway. The question reviewers often ask is whether the promise goes beyond liability for your own negligence.
Example: a hypothetical clause after three rounds of edits
An engineering firm negotiating with a community association receives an indemnity clause after three rounds of edits. The defend language is already out, and the firm has a reciprocal indemnity in its favor. The firm sends the clause to its agent, who asks the insurer’s contract review team for its read on the remaining pieces before signing.
In this hypothetical, the firm still takes the reviewer’s comments to its attorney. Whether the clause is covered depends on policy wording, exclusions and the facts of any later claim.
What triggers the indemnity promise?
Some clauses tie the indemnity to negligent acts, errors or omissions. Others tie it to any act, error or omission and list negligence as one example. The second kind can reach further than negligence.
The word “including” usually widens a list rather than limiting it.
How does the clause treat shared fault?
Some clauses cover losses “arising out of” your work. Others cover losses only to the extent you caused them. Reviewers pay attention to this difference when several parties share fault. In general, the first wording can reach losses connected to your work even when others share blame, while the second usually limits your share to the part you caused. Ask your attorney how it applies to your contract.
Which costs does the clause include?
Lists often include attorneys’ fees, expert fees and other engineering fees. Ask whose costs these are, and whether your policy would treat them as damages. That depends on your policy wording.
Who is protected, and whose work do you answer for?
Count the protected parties, such as board members, officers, members and employees. Longer lists mean more potential claimants.
Many clauses also include your subconsultants’ work. Your policy may respond for work you are legally responsible for, but it doesn’t insure the subconsultant. Require subconsultants to carry their own coverage and collect their certificates.
What parts of an indemnity clause may help you?
- A reciprocal indemnity from the client, for example when the client goes against your advice or skips recommended scope.
- A standard of care statement with no warranties or guarantees.
Does your coverage last as long as the promise?
Indemnity obligations often survive termination. Professional liability is usually claims-made, so you need coverage in force when a claim is made, possibly years later. Retroactive dates and tail coverage may matter here, depending on your policy.
What is often missing from an indemnity clause?
A limitation of liability and a mutual waiver of consequential damages are common companions to an indemnity clause. Check whether the agreement includes them elsewhere. For model forms, see the EJCDC engineering agreement documents and AIA Contract Documents.
Questions to ask your attorney
- Is the indemnity limited to my negligence, or broader?
- Is my share limited to my own fault when others share blame?
- Which fees and costs am I promising to pay, and to whom?
- Does the promise survive termination, and for how long?
- Is there a limitation of liability elsewhere in the agreement?
This article is general education, not legal advice. Hardcover is an insurance agency, not a law firm.
What to check
- Does the clause tie the promise to negligence or to any act, error or omission?
- Does it say “arising out of” or “to the extent caused by”?
- Which fees and costs does it list?
- How many parties does it protect?
- Does it cover your subconsultants’ work, and do they carry their own insurance?
- Does the promise survive termination, and is your coverage in force then?
Related questions
Is an indemnification clause covered by professional liability insurance?
It depends on your policy wording and the facts of a claim. Policies are generally built around liability for your own negligence. Ask your agent to have the insurer review the clause.
What is the difference between “arising out of” and “to the extent caused by”?
In general, the first can reach losses connected to your work even when others share fault. The second usually limits your share to the part you caused. Ask your attorney how it applies to your contract.
If there is no duty to defend, is the clause safe?
Removing defend language addresses one common concern. Reviewers also look at the trigger, fault sharing, costs and who is protected.
Should my client indemnify me too?
Many design contracts include a reciprocal indemnity. Discuss the scope with your attorney.