Two sources of indemnity
Indemnity can come from a contract or from the law itself. Contractual indemnity appears in construction subcontracts, leases, vendor agreements, and acquisition documents, where one party promises to cover certain losses or claims for another. Common-law indemnity generally applies when a party is held responsible only because of its relationship to the wrongdoer, without fault of its own, as when a property owner is liable under a statute for a contractor's negligence. It differs from contribution, which divides responsibility among parties who share fault. The source of the right affects what has to be proven and what can be recovered.
Reading the clause and giving notice
The wording of an indemnity clause controls its reach: which claims it covers, whether it includes defense costs and attorney's fees, and whether it applies to the indemnified party's own negligence. In New York, clauses in construction contracts that try to indemnify a party for its own negligence are restricted by statute, and courts read indemnity provisions strictly. Many clauses require prompt written notice and a tender of the defense, and skipping those steps invites disputes. Gather the contract, any insurance certificates or additional insured endorsements, the underlying claim papers, and correspondence about the tender. Coverage as an additional insured is a separate right from contractual indemnity, and both should be pursued where available.
Timing and procedure
When the underlying case is still pending, indemnity claims are often brought by impleading the other party as a third-party defendant in the same action. In New York, a claim for indemnity usually accrues when the indemnified party pays the loss, so its timing can differ from the underlying claim, though contract terms and related claims can complicate that. Settling the underlying claim without involving the indemnitor can raise questions about whether the settlement was reasonable. Our review maps every source of indemnity and insurance, the notice steps already taken, and the procedural route that fits. We also look at whether the indemnifying party is solvent or insured, because a right to indemnity is worth what can be collected on it.
