Hardwood Floors April/May 2026

By Barbara F. Dunn

Why is it important? Indemnification shifts risk from one party to another, often covering third-party claims, breaches of contract, or negligence. Example: Suppose John hires Matt to cut down a tree in his front yard. Matt agrees to indemnify John if Matt acts negligently. While working, Matt fails to notice a fence next to the tree. The tree falls, damaging the fence. The fence’s owner sues John for the repair costs. John notifies Matt and relies on the indemnification clause. Matt then pays all costs John incurs in defending the lawsuit, as well as any damages John must pay to the fence’s owner. Key questions to ask: • Who is responsible for indemnifying whom? • Who is protected by the indemnification (just your company, or also affiliates, employees, etc.)? • What is the “triggering event” (negligence, breach of contract, violation of law)? • What types of losses are covered (damages, legal fees, settlements, fines, property damage, personal injury)? • Are there exceptions (such as if the claim was caused by the party seeking indemnification)? • Is the indemnification mutual or only one-sided?

INSURANCE What is it? Insurance is a way to protect against financial loss. It is a contract in which one party (the insurer) agrees to pay for certain losses, damages, or liabilities that another party (the insured) might incur, usually in exchange for regular payments called premiums. In contracts, insurance provisions require one or both parties to maintain certain types and amounts of insurance coverage. Why is it important? Insurance provides coverage for financial losses if something goes wrong. Example: If Matt has insurance for his tree removal business, and the fence is damaged, Matt’s insurance can help cover the costs of defending the lawsuit and paying for the damage. This means John is less likely to face out-of-pocket expenses, since Matt’s insurance provides financial protection for accidents like this. Key considerations: • Who (one or both parties) must carry insurance? • What types of insurance are required (general liability, professional liability, etc.)? • What amount of coverage is required? Is it reasonable for the risks involved? • Does the contract require one party to be named as an additional insured? If so, your company gets some of the same protection as the policyholder for claims related to the work. • Will you receive proof of insurance coverage? Always require a certificate of insurance.

the magazine of the national wood flooring association

33