For many design professionals an indemnification obligation is one of the most confusing clauses they may see in a professional services contract. Contributing to that confusion is when a duty to defend is added to the contractual indemnification. If you ask a design professional to explain what an indemnification obligation is, likely few will be able to answer that question. If you ask a design professional should they be concerned about an indemnification obligation nearly all will answer with a resounding “YES!” even if they do not fully understand what an indemnification obligation is.
A design professional’s lack of fully understanding what a contractual indemnification and a contractual obligation to defend are, and how both may increase a design professional’s liability exposure as well as potentially fall outside the scope of professional liability coverage, makes it challenging to explain to their clients why a broad form indemnification and duty to defend are not in the best interest of all parties and a successful project.
To help design professionals better understand contractual indemnity and duty to defend obligations, the America Council of Engineering Companies (ACEC) has developed a special website on What You Need to Know About Broad Form Indemnification and the “Duty to Defend.” The site provides information in written commentaries, short videos and infographics.
Design professionals can use these tools to aide in their comprehension so that they can effectively articulate the issues and concerns to their clients which is key to any successful negotiation.