Before signing an indemnity agreement, what should a contractor do?

Before signing an indemnity agreement, it is essential for a contractor to review their liability insurance policy. This action ensures that the contractor understands the extent of their coverage in relation to the potential liabilities they are agreeing to indemnify. An indemnity agreement often shifts certain risks and responsibilities associated with a project onto the contractor, which may not be fully covered by their existing liability insurance. By reviewing the policy, the contractor can identify any gaps in coverage or limitations that could expose them to significant financial risk.

While consulting a lawyer may be beneficial for legal advice and discussions with financial advisors may assist in understanding financial implications, these steps do not address the immediate need to understand how the terms of the indemnity agreement interplay with the contractor's insurance coverage. Similarly, completing a financial assessment does not provide specific insights into liability risks or insurance terms that would impact the contractor's decision to sign the indemnity agreement. Hence, the most pertinent and immediate step is to review the liability insurance policy.