What Is A Hold Harmless?

https://robfreeman.com - A hold harmless is a common clause in legal contracts and is a fundamental concept in risk transfer. A hold harmless releases one party from consequences or liabilities due to the acts of another party.

Put another way, the party granting the hold harmless to a third party shifts some or all of the risks onto itself, away from that third party.

A hold harmless agreement may also be referred to as an indemnification clause… However, this is a bit of a misnomer because indemnification and hold harmless are actually two different things.

While both require a party to assume responsibilities for another party, a hold harmless may require that a party assume responsibility for making another party whole, as well as assuming liability, whereas an indemnification agreement may only require making the other party whole due to certain financial losses.

Hold harmless clauses are found in commercial leases and construction agreements, for example. In a construction agreement example, if a land owner hires a general contractor to construct a new building, the land owner may require the GC to sign an agreement that includes a hold harmless to protect the landowner in the event that someone is injured on the job.

There are mutual (bilateral) hold harmless agreements where both parties hold each other harmless and then there are unilateral ones where one party agrees to hold the other harmless. Hold harmless agreements also vary in their breadth... There are limited, intermediate and broad form hold harmless agreements.

Insurance carriers for construction general liability policies often require that contractual language between parties, have hold harmless language in favor of the insured.