What Is the Difference Between An Indemnity Clause and An Additional Insured Clause ?
In Danis Bldg. Constr. Co. v. Employers Fire Ins. Co., Montgomery App. No. 19264, 2002 Ohio 6374, Danis was the general contractor on a project, and it subcontracted with Mitre Masonry for masonry work.
Mitre's contract with Danis required Mitre to name Danis as an additional insured on its comprehensive business and umbrella insurance policies.
The primary policy limited Danis's coverage to liability arising out of work performed for Danis by Mitre. Id. at P8, 26.
In Danis, the Court discussed the difference between an indemnity clause and an additional insured clause. "A distinction must be drawn between contractual provisions which seek to exempt a party from liability to persons who have been injured or whose property has been damaged (i.e., an indemnity clause) and contractual provisions which in effect simply require one of the parties to the contract to provide insurance for all the parties (i.e., an additional insured clause)." Id. at P32.
The Court observed that, under an additional insured clause, "coverage would be available only with respect to liability arising out of the subcontractor's work."
In adopting this reasoning, we implicitly found that additional insured provisions in a contract do not violate R.C. 2305.31, which prohibits indemnity agreements on public policy grounds. Danis, supra at 32.