Federal Insurance Co. v. Gulf Insurance Co.
162 S.W.3d 160 | Missouri Court of Appeals | 2005
What This Case Means for Subcontractors
A contractor (Sachs) agreed to hold the project owner (Aqualon) harmless for employee injuries under their contract. When an employee died on the job, the contractor's insurer (Federal) paid a $2.9 million settlement. Federal then tried to get the owner's insurer (Gulf) to split the cost, but the court ruled against it. Because the contractor had promised to cover all such losses, the contractor's insurer must pay the full amount—the owner's insurer has no obligation to contribute.
Key Takeaways
- •Broad indemnification clauses that require you to hold the owner harmless for employee injuries mean your insurance company pays the full settlement, not the owner's insurer.
- •Do not agree to indemnify the owner for injuries to your own employees unless you fully understand your insurance coverage and limits.
- •Review indemnification language carefully before signing. Clauses that exclude only 'sole negligence' of the owner are especially broad and expensive.
Sachs' obligation to indemnify Aqualon requires Sachs' insurers to cover the entire settlement amount.
Frequently Asked Question
If I agree to indemnify the owner for employee injuries, does the owner's insurance company have to help pay if someone gets hurt?
No. If your contract requires you to hold the owner harmless for employee injuries, your insurance company bears the full cost of any settlement or judgment. The owner's insurer cannot be forced to contribute. This is why you must carefully review indemnification clauses and ensure your insurance limits are adequate before signing.
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