Hold Harmless Agreement
A contractual clause in which one party agrees not to hold the other party liable for certain risks, losses, or damages arising from the work or the contract. Common in construction and restoration contracts between property owners and contractors.
What Is a Hold Harmless Agreement
A hold harmless agreement is a contractual provision in which one party agrees to assume certain liabilities and to not hold the other party responsible for specified risks, losses, or damages that arise from the work being performed, and it is one of the most common risk allocation tools in construction and restoration contracts. The clause defines which party bears the financial responsibility if something goes wrong during the project.
Types of Hold Harmless Clauses
There are three types of hold harmless clauses. A broad form clause indemnifies one party for all liability, including the indemnified party's own negligence. An intermediate form indemnifies the party except for their sole negligence. A limited form indemnifies the party only for liability caused by the indemnifying party's own actions. Broad form clauses have been outlawed or restricted in many states because they allow negligent parties to avoid all liability. Most enforceable construction hold harmless clauses use the intermediate or limited form.
Hold Harmless in Restoration Work
Restoration contractors encounter hold harmless language in contracts with property owners, insurance carriers, third-party administrators, and subcontractors. Before signing any contract with a hold harmless clause, read it carefully and understand what liability you are assuming. A clause that requires you to indemnify the property owner for pre-existing conditions you did not create is a red flag. A clause that requires you to indemnify the owner for damage caused by your work is standard and reasonable. The language matters, and having an attorney review non-standard hold harmless provisions is money well spent.
Frequently asked questions
A hold harmless agreement is a contract clause where one party agrees to assume liability for certain risks and not hold the other party responsible. In construction, the property owner may agree to hold the contractor harmless for pre-existing conditions, while the contractor agrees to hold the owner harmless for damages caused by the contractor's work.
Enforceability depends on state law. Many states have anti-indemnity statutes that limit or prohibit hold harmless agreements in construction contracts, especially clauses that attempt to indemnify a party for their own negligence. Always verify that the hold harmless language complies with the applicable state statute.
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