What it means
Hold harmless and indemnity clauses shift financial responsibility between contracting parties. A subcontractor might agree to defend and pay for claims against the general contractor that arise from the subcontractor’s work.
Clauses vary widely. A limited form covers only the indemnitor’s own negligence, while broader forms try to cover shared or even sole negligence of the other party. California law restricts some construction indemnity clauses, including those requiring a party to cover another’s sole negligence or willful misconduct.
Insurance supports these promises through contractual liability coverage in a general liability policy. If the clause goes further than the policy will cover, the business may have to pay the gap itself.
An example
Westshore Painting’s subcontract says it will indemnify the general contractor for claims connected to the painting work. When a passerby trips over Westshore’s drop cloth and sues the general contractor, Westshore’s contractual liability coverage responds to the indemnity obligation, subject to the policy terms.
Names in this example are fictional.
See this term in your own contract.
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Get a free contract checkHold harmless and indemnity, answered
Does general liability insurance cover indemnity agreements?
Often it does, within limits. Standard general liability policies cover liability assumed in an insured contract, which includes many indemnity clauses that assume another party’s tort liability. Some policies narrow that coverage by endorsement, such as CG 21 39. Before signing, compare the indemnity clause with your policy to see whether any gap remains.
Can California contracts require me to cover the other party’s negligence?
Partly. California law voids certain construction indemnity provisions, including those covering the other party’s sole negligence or willful misconduct, and adds further limits for some public and private projects. Shared fault clauses may still be enforceable. A lawyer should review significant contracts, since enforceability depends on the exact wording and project type.
General information only. It is not legal or insurance advice. Only issued policy documents and endorsements describe actual coverage.