SUBSCRIBER INSISTING ON MUTUAL INDEMNIFICATION
Subscriber is insisting on mutual indemnification. It could be worse - the subscriber could be demanding that the alarm company indemnify the subscriber. The mutual indemnity the subscriber's lawyer drafted appears below. I don't think it works and I don't think it's a good idea. I'll tell you why below.
Proposed mutual indemnification:
Each Party hereby agrees to unconditionally indemnify, defend and hold harmless the other Party and all subsidiary, affiliates, their shareholders, directors, officers, employees, attorneys, agents, and representatives and assigns (collectively, the "Other Party Indemnitees") from and against all liabilities, losses, damages and costs (including reasonable attorneys' fees) (collectively, "Losses") they may suffer as the result of Third Party claims, demands, actions, suits or judgments against them resulting from or arising out of: (a) the negligence, recklessness or willful misconduct on the part of the indemnifying Party; (b) the failure by the indemnifying Party to comply with applicable Laws in connection with the exercise of any of its rights or the performance of any of its obligations hereunder; and/or (c) any breach of this Agreement by the indemnifying Party. The foregoing indemnification obligation shall not apply to Losses to the extent resulting from or arising out of: (i) the negligence, recklessness or willful misconduct on the part of any of the Other Party Indemnitees; (ii) the failure by the other Party to comply with applicable Laws; or (iii) any breach of this Agreement by the other Party.
The problem with the above is, among other reasons, this: If there is a loss and claim made that calls into question the alarm or security service it's almost certain that the alarm company is going to be charged with some wrongdoing, failure to perform or negligence. What will the subscriber be charged with? Sure there will be times that facts will point to the subscriber [left candles buring; left door open; refused to authorize repair to system; allowed communication lines to remain inoperable]. But when is the blame likely to be determined? After the trial, because before the trial why would one party admit liability and assume the indemnity of the other? They are not likely to.
Another problem is that indemnity after the matter is concluded is less desirable than indemnity assumed at the start of the claim. If indemnity is assumed at the start of the claim not only is the defense covered but there are no issues regarding whether the claim should have been settled.
So mutual indemnity will turn out to by alarm company indemnifying the subscriber and the issue of indemnity may be delayed until the claim is resolved and at that point waived or forgotten.
I just finished defending a case and the legal fees are close to $100,000.00, paid by the alarm company's insurance carrier. We won and now that we won I want to pursue the indemnity claim against the subscriber, as the Standard Form Agreement permits. The carrier can't make up it's mind if it wants to pursue the indemnity. Well, it's the carrier's money. But if it's your money you want to cash in on your indemnity as soon as you can, and with mutual indemnity that's not likely possible.
Here is the advise I have in this situation:
I suggest crossing out the indemnity provision [its one sentence in the Standard Form Agreements]. Replace it with:
Each party agrees to carry insurance sufficient to cover its insurable interests and agrees to look to its own insurance coverage for any losses or claims arising out of this agreement, the relation of the parties or the alarm system or services.