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What is a Confidentiality or Indemnity Clause, and Should I Sign It?

Posted on Tuesday, May 26th, 2015 at 5:18 pm    

crashedcarIt has become commonplace for Northern Kentucky and Greater Cincinnati residents to receive settlement offers from automobile insurance companies very soon after the accident occurs. Generally, these settlement offers are pitifully small – generally only a small fraction of the claim’s true value. (Insurance adjusters are often instructed not to offer even half of a claim’s full value if the injured person does not have an attorney.) Even more troubling, the insurance adjuster will often insert a confidentiality clause and indemnity clause into the settlement agreement without informing the injured person.

These clauses are dangerous and shouldn’t be signed without consulting an attorney. Lawrence & Associates Accident and Injury Lawyers, LLC’ blog has discussed before that it is dangerous to handle an auto insurance claim yourself. In fact, insurance companies often deny coverage for frivolous reasons if no attorney is involved. Confidentiality clauses and indemnity clauses are perfect examples of ways an adjuster will take advantage of the do-it-yourself injured person without the injured person realizing it.

An indemnity clause states that the injured person will personally become involved in any further lawsuit related to the auto accident, including paying the bills for defending the insurance carrier! If you can imagine a three-car, chain reaction collision where the middle car settles without an attorney but the front car and rear car go to court, you can imagine how the driver of the middle car might get sucked into the lawsuit based on an indemnity clause. Defending an insurance carrier in court is expensive and time consuming, and frankly it is impossible for most Northern Kentucky and Greater Cincinnati residents. However, if the injured person is unable to defend and indemnify the insurance company, the insurance company can claim that the injured person has violated the terms of the settlement agreement and take back the settlement money. This leaves the injured person with nothing. Don’t sign a settlement release with an indemnity clause unless you have consulted with an attorney first.

Confidentiality clauses require the complete confidentiality of the injured person about the terms of the settlement. Some insurance companies will even try to prevent the injured person from telling his or her own spouse about the settlement terms. If the injured person breaks confidentiality, then the insurance company demands the settlement money back and the injured person is again left with nothing. Recently, a Florida man lost his entire settlement because his teenage daughter posted about it on Facebook. Confidentiality clauses aren’t always bad, but you can insist that the auto insurance company pay you extra for signing one. If they won’t, get an attorney before you sign off on one.

At Lawrence & Associates Accident and Injury Lawyers, LLC, we know settlement releases and we know how to get a fair settlement for our clients. We represent Kentucky and Ohio clients in all forms of automobile collision litigation. We’re Working Hard for the Working Class, and we’d be proud to represent you. Call today!

Last Updated : February 20, 2019
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