Hercules Offshore and its drilling company hired Excell Crane for services under a contract with both indemnity and insurance provisions. When an employee was injured, a dispute arose over whether Excell's insurance had to pay first before Hercules could claim indemnification. The Texas Court of Appeals ruled that the insurance requirement must be satisfied before the indemnity obligation kicks in, even when the indemnity language is very broad. This protects contractors by ensuring insurance coverage is exhausted first.
If your contract names the other party as an 'additional assured' on your insurance, that insurance must be exhausted before they can claim indemnification from you
Broad indemnity language does not override the priority of insurance requirements—courts will enforce the insurance-first rule under maritime law
Include clear insurance requirements and 'additional assured' language in your subcontracts to establish a payment hierarchy that protects you