So, you have finally agreed on a settlement amount with the opposing party and they send you a copy of a settlement release which asks you to “indemnify” them or “hold them harmless.” What does it mean? Should you agree to it? Well, as with most things, it depends.


Indemnification (sometimes also called a “hold harmless” provision) in its most simple terms means that you will defend someone else. In terms of a settlement, it usually means that one party (i.e. the Plaintiff) will pay the other party (i.e. the Defendant) if someone else sues the Defendant related to the same incident. If you agree to an indemnification clause, and then someone sues the defendant for the same incident, the defendant can force you to pay their legal bills for defending against that new lawsuit and can also force you to pay whatever judgment is obtained against them in the new lawsuit.


This is a common provision that most defendants want in the release, to protect them against further lawsuits. Defendants worry (for example) that if they settle with you, they might still get sued by your insurance carrier who may have paid you for part of your loss. Defendants crave finality and this provision is one way for them to achieve it.


Whether you should agree to such a clause is dependent on several things, such as your comfort level regarding whether there are other potential lawsuits lurking out there and how good the settlement is for you. It never hurts to request that the indemnification provision be removed from the settlement release, but you will need to be able to explain why you think it should be removed. But, if the other side will not budge, it is also important to evaluate the potential risk of agreeing to such a provision and the ways to potentially mitigate that risk.


If an indemnification provision must remain in the agreement, it is important to limit your risk by ensuring that is not too broad. If, for example, you were in a car accident involving several different vehicles and the indemnification provision is too broad, it may mean that you could then be responsible if any other driver were to try and sue the defendant.


If you are working on a settlement with another party, whether a formal lawsuit has been filed or not, talk to the experienced trial attorneys at Goosmann Law Firm, PLC, in our Omaha, Sioux City, or Sioux Falls offices to review the terms of the release and ensure that you understand what you may be agreeing to.


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