On February 13, 2015, the Texas Supreme Court decided In re Deepwater Horizon, a closely watched certified question from the U.S. Court of Appeals for the Fifth Circuit concerning the unique interplay between the indemnity and insurance requirements in service contracts and the coverages provided in insurance policies. This case highlights some dangerous pitfalls to avoid in knowing how indemnity and insurance provisions work together.

Transocean owned a drilling rig that was operating in the Gulf of Mexico under a contract between Transocean and BP. After the rig exploded, BP sought coverage as an additional insured under Transocean’s insurance policy for the myriad of claims for personal injuries and environmental and economic damages resulting from the release of millions of gallons of oil into the Gulf.

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