A hold harmless agreement is a contract provision that transfers risk from one party to another, in which the party giving the promise agrees that the protected party will not be held responsible for claims arising from a specific activity. Depending on how it is written, that can include claims caused by the protected party's own negligence.
You will sign one before almost every construction subcontract, equipment lease, or venue rental, usually bundled with an indemnification clause in the same paragraph.
Hold Harmless Agreement
A contractual risk transfer in which one party agrees to hold another harmless from liability or legal claims related to a specified activity, sometimes including losses caused by the protected party's own actions.
How is a hold harmless agreement different from indemnification?
The two terms travel together in contracts and get used interchangeably, but they do different jobs. The hold harmless promise is the assurance: it transfers the risk, saying the protected party will not be held responsible. Indemnification is the payment: to indemnify is to make the other party whole after a loss, with the indemnitor absorbing the financial consequences of the indemnitee's liability.
A useful memory aid from casualty coursework is that hold harmless transfers the risk while indemnification writes the check. In practice you should read the two clauses as one risk transfer package, then ask the question that actually matters: how much of the other party's fault did your company just agree to carry?
What are the three forms of hold harmless agreements?
Contract drafters and underwriters sort these clauses into three tiers by how much fault shifts downstream.
- Limited form: you are responsible only to the degree of your own fault. Partial fault, partial obligation.
- Intermediate form: you carry the entire loss whenever you share any fault at all, and escape only if the protected party was solely negligent. Partial fault, full obligation.
- Broad form: you carry everything arising from the work, even losses caused by the protected party's sole negligence. No fault required, full obligation.
The tiers matter because states police them. All but six states have some form of anti-indemnity statute, and broad form wording, along with some intermediate wording, has been voided in many of them. The Texas Supreme Court in Zurich American Insurance Co. v. Nokia applied that state's anti-indemnity statute to strike a construction clause requiring indemnity for the indemnitee's own negligence.
This is why an upstream party rarely relies on the clause alone and also demands additional insured status on your policy as a backup if a statute guts the contract language.
Frequently asked questions
Is a hold harmless agreement legally enforceable?
Often, but not always. All but six states have anti-indemnity statutes, and many void broad form clauses that shift the protected party's sole negligence, especially in construction. Enforceability turns on your state and the wording, so have contracts reviewed before you sign.
Does my insurance cover a hold harmless agreement?
Frequently yes. The CGL policy covers liability you assume in an insured contract for bodily injury and property damage, which picks up many hold harmless promises. Coverage does not extend to every promise you can sign, so send contracts to your broker before work starts.
What is the difference between limited, intermediate, and broad form?
Limited form makes you pay only for your share of fault. Intermediate form makes you pay the whole loss if you share any fault, excusing you only when the other party is solely negligent. Broad form makes you pay even for the other party's sole negligence.
This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.