1 Introduction

Although knock-for-knock (K4K) indemnity provisions have become common (if not necessary or legally required) in many energy and marine insurance contracts, in reality their actual application in insurance claims can be complex, as K4K provisions do not always harmonize with basic general liability policy provisions. As discussed in more detail in Chapter 2, K4K indemnity provisions involve reciprocal responsibilities, wherein each party agrees to be responsible, or to indemnify, the other for damage or injury to its own property or employees, regardless of fault for loss. The rationale for K4K provisions starts with the need to avoid delay and disruption. In theory, these provisions will prevent the need for detailed investigation and reduce the scope (and costs) of any dispute or litigation. They can also benefit the business relationships of the contracting parties by reducing the possibility of scorched-earth contract and tort disputes and, theoretically, encouraging the parties to provide a safer workplace. The concept of K4K indemnity is so fundamental to marine energy contracts that such provisions are required by the P&I insurance clubs for certain type of insured entities to be considered in their insurance “pooling” arrangements. In this context, any deviation from the K4K regime by the entities will necessitate their purchase of additional extensions to their coverage that will typically have lower limits and be more expensive. However, outside of the context of P&I insurance clubs, other insurers may be less experienced with understanding the interplay between K4K provisions and their policy language.