IndemnityAggressive — Push Back

Indemnity Cap Aligned to Insurance

What this clause says

Manufacturer's aggregate liability under the indemnity provisions of this Agreement shall not exceed the limits of insurance Manufacturer is required to carry hereunder.

What this means in plain English

Your maximum exposure under indemnity is capped at your insurance limits.

What it means for a CDMO program

A non-negotiable to push for. Without it, an uninsured indemnity obligation could survive even if a claim exceeds your policy limits, exposing the company's balance sheet directly. Sponsors often resist this; the compromise is usually a carve-out where the cap does not apply to gross negligence, willful misconduct, or IP infringement.

How this evaluates

The Decoder applies these rules in order; the first match wins.

indemnity › cap at insurance is set → Compliant: Indemnity capped at insurance limits — favorable.
indemnity › cap at insurance is not set → Gap: No cap on indemnity — major exposure beyond insurance.

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Related clauses

Indemnity Cap Aligned to Insurance — common questions

Why cap indemnity at insurance limits?

An uncapped indemnity exposes your balance sheet directly. Capping it at the level your insurance can respond to means you are never paying out-of-pocket for a covered claim. This is the single most important negotiation move in a sponsor MSA.

Is a cap at insurance limits negotiable?

Often yes, especially with sophisticated counsel-side help. Sponsors push back, but most accept a cap when the insurance limits are robust ($5M+ products) and the carve-outs (gross negligence, willful misconduct, IP infringement) are reasonable.

What carve-outs do sponsors typically demand?

Gross negligence, willful misconduct, breach of confidentiality, IP infringement, and indemnification-as-additional-insured obligations. These bypass the cap. Negotiate carefully — the carve-outs can re-uncap meaningful exposure.