Indemnity
A contractual undertaking to protect another party from legal consequences of specified conduct. Its scope comes from the contract and applicable law; it is not automatically identical to insurance coverage.
Indemnity is a contractual allocation of responsibility. California Civil Code section 2772 defines it as a contract by which one person agrees to save another from a legal consequence of the conduct of a party or someone else.
The insurance clause and indemnity clause should be read together, but they are not interchangeable. A contract may promise a defense or liability allocation broader than a policy’s coverage grant. State law can also limit some indemnity agreements; California, for example, has special rules for certain design-professional construction contracts.
The practical review is specific: identify whose conduct is covered, the types of claims named, whether a defense is promised, and the policy endorsement expected to support the arrangement. Do that before describing a certificate as proof that the contractual obligation is satisfied.
Sources
- Primary source: California Civil Code § 2772 — Statutory definition of indemnity as a contract to save another from legal consequences of specified conduct.
- Primary source: California Civil Code § 2782.8 — An example of state-law limits on certain design-professional construction indemnity provisions.