Star Insurance v. Continental Resources, Inc.
89 F. Supp. 3d 1015 | District Court, D. North Dakota | 2015
What This Case Means for Subcontractors
A drilling subcontractor (Cyclone Drilling) was required to indemnify the operator (Continental Resources) under an IADC drilling contract after a well explosion injured three workers. The court enforced the indemnity clause as written, finding it unlimited because the contract explicitly stated indemnification would be 'without limit.' This case shows that broad indemnity language in drilling contracts can expose subcontractors to unlimited liability regardless of insurance coverage amounts.
Key Takeaways
- •Never sign a contract with 'without limit' indemnification language unless you fully understand the financial exposure and have adequate insurance to cover it
- •Insurance requirements must be clearly specified in the contract itself—if they're not written into the agreement, courts won't use them to cap your indemnity obligation
- •Review indemnity clauses carefully before signing; courts will enforce the exact language you agree to, even if it creates unlimited liability
Cyclone Drilling's indemnity obligation to Continental Resources is clearly 'without limit.'
Frequently Asked Question
Can I limit my indemnity obligation if my insurance doesn't cover the full amount?
No. If your contract says indemnification is 'without limit,' courts will enforce it as written, even if your insurance is insufficient. The insurance requirements must be explicitly stated in the contract itself to have any limiting effect. Always ensure your insurance matches your indemnity obligations before signing.
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