Hold Harmless, Indemnity, and Three Things to Think About

Management Team

We’ve probably all watched enough Law and Order or CSI to have a basic understanding about how America’s legal system works.  However, what may not always be apparent are the differences between the criminal and civil systems.  While criminal cases typically use the standard of proof known as “beyond a reasonable doubt” civil cases often use what’s known as “preponderance of evidence,” or “clear and convincing evidence.”

Essentially, what this means is that the plaintiff in a case must provide just enough evidence to make it more likely than not that the fact the claimant seeks to prove is true.  The burden of proof is always on the plaintiff.

So what does this mean for crane and rigging companies?  It means that they need to do everythign possible to ensure protection against a lawsuit that may eventually arise.  In essence, crane and rigging companies want to make sure that there is never a preponderance of evidence against them that holds them accountable for things they shouldn’t be accountable for.

Unfortunately, we live in a litigious society and any time there’s an accident on a jobsite, someone is usually looking for compensation.  For crane and rigging companies, the first and est line of defense starts with the contract.

Crane and rigging companies are contractors, which you may notice actually has the word “contract” in it.  That should tell you something about importance.  Contracts are essentially playbooks for how litigation plays out.  If it’s in the contract, it’s easily defensible and enforceable.  If it’s not in the contract, it’s much harder — and more expensive — to defend or enforce.  So with that in mind, here are three things that are imperative to every contract.

  1. The contract must be signed. A contract that is not signed is like a cell phone with a bill that hasn’t been paid.  You won’t be able to use it when you really need to.  As you probably know, a contract is only enforceable when it’s signed.  But even if it is, you need to make sure that the contract is signed by an individual that has the authority to sign it —  meaning someone with the ability to make decisions.
  2. The contract must contain an indemnity provision you can live with. Indemnity provisions vary greatly and you must be sure you’re okay with the one you’re signing.  As a general rule, you never want to be responsible for anything that is out of your control or didn’t occur as a direct result of something you did.  As the old saying goes, “GOod fences make good neighbors.” Just make sure you’re not buying her fence, too.
  3. A “Hold Harmless” provision is not blanket protection from liability. While indemnification and hold harmless clauses offer some level of protection, it’s not a complete “get out of jail free” card.  There are hold harmless and indemnity agreements that are unenforceable, and they typically vary from state to state.

When it’s all said and done, the contract a crane and rigging company signs should put it in a position where the preponderance of evidence clearly states that the company is indemnified or held harmless from liability not arising of its own fault.  Anything less than that is a roll of the dice, and heavy construction is risky enough as it is.

*Allied does not deem this blog entry as a complete and thorough listing or overview of the above topic, and does not recommend it be primarily relied on. It only highlights some common issues and resolutions. For a thorough overview, please contact Allied’s Risk Engineering Division.