Beware indemnity provisions that exceed your professional-indemnity insurance cover

When presented with your client's conditions of engagement, it is always wise to check them thoroughly, as some conditions may not be reasonable. For example, some client (particularly government) conditions may include a provision that the principal consultant shall indemnify the Commonwealth against:

…any claim, demand, action, suit or proceeding that may be…brought by any person against the client or the employees, professional consultants or agents of the client…(for injury, death or damage)…arising out of or as a consequence of an act of negligence by the Principal Consultant…or his employees, agents or subconsultants…

To the extent that this clause mirrors the common law, it is unnecessary. To the extent that it exceeds the common law, the liability will not be covered by your insurance. The most insidious point about such clauses is that there could be an argument with your insurer about whether the liability is the normal common-law liability or not. Unfortunately there will be no similar argument with the client – you will have to pay. What the client will achieve by this sort of clause is disputed payment by insurers in all but the clearest cases of professional negligence.