Thompson Rivers University
Thompson Rivers University

Contracts – Liability and Insurance

Indemnity clauses are commonly used in contracts. An indemnity is a risk transfer mechanism between parties allocating who will pay for certain types or causes of loss.

Under British Columbia law, indemnities must not be given by government corporations (including public Universities like TRU), and are not binding unless approved by the Executive Director of the Risk Management Branch (RMB).

Therefore, all contracts that TRU enters into which have an indemnity given by the University must be sent to TRU Risk Management Services at insurance-liability@tru.ca.  Risk Management Services will send the contract to the RMB, provide liaison between the contracting department and the RMB to resolve any issues with the indemnity and receive the indemnity approval once granted. This is a separate but complementary process to contract review which is managed by TRU’s Office of General Counsel.

A good indemnity is reasonable, fair, and places the risk of loss on the party most able to manage the risks, returning the indemnified party to the financial position it was in before the loss occurred. Sometimes, however, the University is asked to grant an indemnity for the actions of others, or take on risks in a contractual setting that would not normally reside with TRU. Often there are two indemnity clauses, with similar language, used to bind each party (reciprocal agreements). Sometimes, however, indemnities may be ‘one sided‘, with obligations placed on the University, but not on the other party. Another issue may arise when the indemnity clause is very broad, potentially including risks that the University does not control. These indemnities may allocate risk inappropriately to the University, and the Risk Management Branch may ask for the language to be changed or withhold their approval.

Indemnity approval can take a significant amount of time. Indemnities contained in simple contracts may be approved within ten working days, but more indemnities contained in complex contracts, especially those with problematic clauses, may take more than a month for processing.

Any queries about indemnities should be sent to Risk Management Services at insurance-liability@tru.ca.

Contracts with insurance clauses, or contracts that ask for proof of insurance or the provision of an insurance certificate, should also be sent to Risk Management Services for review. TRU carries a range of insurance coverages sufficient for most third parties. Requests for certificates must be accompanied by a copy of the contract or written agreement. Where contracts ask for proof of insurance, but do not require any specific terms, (eg. for the third party to be named), a blanket certificate can often be used as evidence that the university is insured. Certificates can usually be issued within five working days.