The short answer
An indemnification clause shifts certain losses from one party to another, often including defense costs. In Illinois, whether a clause actually covers a particular loss depends heavily on its exact wording, and some indemnity promises are unenforceable by statute.
Why it matters
When a third party sues, the indemnity clause can decide who pays the lawyers and the settlement. A clause that looked routine at signing can be worth more, or less, than the insurance behind it.
Where it fits in your case
When you negotiate a contract, and again when a claim arises that involves work, products, or premises covered by the contract.
What to expect
Your own negligence. Illinois courts generally require clear language before enforcing a promise to indemnify someone for its own negligence.
Construction contracts. An Illinois statute makes promises in construction contracts to indemnify a party for its own negligence void and unenforceable.
Defense versus payment. Some clauses require the other party to defend you as claims arise; others only reimburse losses at the end.
Workers’ injuries. In Illinois, an employer’s contribution to an injured worker’s lawsuit is usually capped at its workers’ compensation liability, but that cap can be waived by contract.
Insurance behind the promise. An indemnity promise is only as good as the indemnitor’s assets or insurance, which is why contracts often pair it with additional insured requirements.
What to do now
Send the claim to the indemnitor in writing as soon as it arrives, citing the clause.
Tender the claim to any insurer that may cover you as an additional insured.
Read the clause for notice requirements, caps, and exclusions.
Keep the contract and all related correspondence together.
What we need from you
The contract, the claim or lawsuit, any insurance certificates or endorsements, and notices you have sent.
Common misconceptions
“Hold harmless means they pay for everything.” Courts read indemnity clauses narrowly and by their exact terms.
“An indemnity clause is the same as insurance.” It depends on the other party’s ability and willingness to pay.