Owners and general contractors are demanding more and more that contracts with subcontractors contain indemnification clauses. Do you know whether your contracts contain an indemnification clause? And if they do, what does an indemnification clause mean?
What Does Indemnification Mean?
Under Nebraska law, indemnification is available when one party is compelled to pay more money which, in justice, another ought to pay or has agreed to pay. Nebraska courts have generally held that a party seeking indemnification must have been free of any wrongdoing. Indemnification is different than contribution in that contribution is defined as a sharing of the costs of an injury as opposed to a complete shifting of the cost from one to another, which is indemnification.
Why You Should Care
As a subcontractor, performing work for an owner or general contractor, you should care whether your contract has an indemnification clause because it may subject you to a liability. In the typical situation, if your employee is injured, your workers’ compensation carrier will compensate the employee for his injury.
But, the employee may also sue the owner or general contractor for negligence. If the owner or general contractor is found liable to the employee, and you have agreed to indemnify the owner or general contractor, you may also have to pay the owner or general contractor any amount that is paid to the employee. In essence, you could be paying twice for the same injury.
Indemnification clauses can be very complicated and they can create additional liability for your company. Make sure you know whether your contract contains an indemnity clause and what that indemnity clause means.
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