Limitation of Liability and Indemnity – What is the Difference?

Your Alarm Contract should contain both a Limitation of Liability Provision and an Indemnification Provision.  I am often asked, what is the difference?  Here is your answer.

A Limitation of Liability Provision limits the damages (money) which can be recovered against your Company by your Customer if you make a mistake.

An Indemnification Provision requires your Customer to defend you (and pay your attorneys’ fees and any settlement or judgment) against any lawsuit brought against your Company by a 3rd party.

Here is an example to illustrate the difference.  Suppose you contract with the owner of a 100 unit residential apartment complex to install a fire sprinkler system and smoke detectors.  There is a fire.  The apartment complex burns down.  There is $10 million in property damage.  Several of the tenants (with whom you had no separate contract) and their guests are injured. Everyone files a lawsuit against your Company.  Here is how the Limitation of Liability and Indemnification Provisions work together:

The Limitation of Liability Provision limits the damages which your Customer (the owner of the residential apartment complex) can recover against your Company for the $10 million in property damage.

The Indemnification Provision requires your Customer to defend you (and pay for your attorneys’ fees and any settlement or judgment) against the lawsuits by the 3rd party tenants and guests.

Both Provisions are essential to protect your Company against the potential for crippling liability.  That is why any well drafted Alarm Contract includes both Provisions.

For any questions or comments, or if I can be of service, please call Michael J. Revness, Esq. at 610-688-2855.

Thank you all for your trust and confidence in AlarmLegal.Com

Michael J. Revness, Esq.


Michael J. Revness, Esq., is a founding partner and chairs the security alarm department at Kurtz & Revness, P.C. For questions, comments, or requests for legal service, please call Mr. Revness at (610) 688-2855, or drop an e-mail to mrevness@kurtzrevnesspc.com. This article is for information purposes only and does not constitute, and should not be relied upon as, legal advice.