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Contracts & Legal

Hold Harmless Clause

In Plain English

A clause where one party agrees not to sue the other for losses related to a specific activity.

Definition

A hold harmless clause is a contract provision in which one party agrees not to hold the other responsible for injuries, losses, or damages arising from specified activities or conditions. In construction, subcontractors typically agree to hold the general contractor harmless from liability arising out of their work. Hold harmless clauses are closely related to indemnification provisions.

Why It Matters in Bidding

A hold harmless clause shifts liability and therefore insurance cost, so estimators and subs must read it before pricing rather than after award. Broad-form versions can make a sub responsible even for the GC's own negligence, which raises insurance premiums or may be uninsurable, directly affecting bid markup and risk contingency.

Example

Before submitting, a subcontractor's estimator forwards the GC's broad-form hold harmless language to the insurance broker, who confirms the policy won't cover the GC's sole negligence, prompting a qualified bid that limits the clause to the sub's own work.

Related Terms

IndemnificationExculpatory ClauseCertificate of InsuranceSubcontract

Frequently Asked Questions

Yes. Broad indemnity language increases the risk you assume, which can raise insurance premiums or require additional coverage. Estimators should confirm insurability with their broker and add contingency or qualify the bid. Some states bar enforcement of clauses covering the other party's sole negligence, so legal review matters.
They overlap and usually appear together. Indemnification is the promise to reimburse losses; hold harmless is the promise not to seek recovery against the other party. For estimating purposes, treat both as risk-transfer provisions whose breadth determines how much liability and insurance cost you must build into the number.
Often, yes. Many states have anti-indemnity statutes limiting how far liability can be shifted, especially for the indemnitee's own negligence, and public contracts may bar them outright. Don't assume a clause is valid; pricing should reflect the realistic risk after counsel reviews the governing state's rules.

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