Hold Harmless Agreements: What You Are Really Agreeing To

A hold harmless agreement shifts responsibility for certain losses from one party to another. It appears in leases, contractor deals, event contracts and waivers, and the wording can be broad.

What it does

• One party agrees not to hold the other responsible for specific claims or losses.
• It may also require that party to cover the other's legal costs, called indemnification.
• It can be one-way or mutual.

Where you see them

• Event or venue rentals.
• Contractor and service agreements.
• Equipment rental and gym waivers.
• Leases and property use agreements.

Limits

Courts often refuse to enforce clauses that excuse intentional wrongdoing or gross negligence, and some states restrict them in certain contracts such as construction or residential leases. Very broad language may be narrowed.

Before you sign

1. Read who is protected, from what and for how long.
2. Ask whether the clause is mutual.
3. Check whether your insurance covers the risk.
4. Negotiate unclear or one-sided terms.
5. Get a lawyer for large or risky contracts.

Types of indemnity clauses

• Limited form: covers only the indemnitor's own negligence.
• Intermediate form: covers shared negligence.
• Broad form: attempts to cover even the other party's sole negligence, which many states restrict, especially in construction.
• Mutual: each party indemnifies the other for its own acts.

Components of a good clause

1. Identify who is protected, including employees and agents.
2. Describe the claims, losses and legal costs covered.
3. Set exceptions for the protected party's negligence or misconduct, where appropriate.
4. Require prompt notice of claims and control of the defense.
5. Tie to insurance requirements and additional insured status.

Insurance and indemnity

Indemnity is only as valuable as the ability of the promisor to pay. Contracts often require certificates of insurance and additional insured endorsements. Check that policies actually cover contractual liability, because many standard policies have exclusions.

Negotiating a fairer clause

• Limit it to claims arising from your own acts or services.
• Add a cap based on insurance limits.
• Exclude consequential damages if appropriate.
• Make it mutual where possible.
• Ensure it does not conflict with state anti-indemnity statutes.

Consumers and renters

Hold harmless language appears in leases, gym memberships and event rentals. It cannot waive some legal rights, and courts may refuse to enforce it for serious misconduct. See our guide to waivers and releases.

Frequently asked questions