Indemnification

What is indemnification?

Indemnification (often paired with hold harmless language) is a contract promise to cover another party's losses from specified events. In construction, owners, GCs, and subs push indemnity clauses to allocate risk for injury, property damage, and third-party claims.

Signing broad indemnity without reading it can make your insurance and balance sheet pay for someone else's mistakes.

Common indemnity patterns

Broad form indemnity is restricted or banned in many states and provinces. Local law matters.

Indemnity vs insurance

Indemnity is a contract obligation. Insurance is how you fund some of those obligations. Your CGL policy may not cover every indemnity you sign, especially punitive or contractual liabilities.

Match contract indemnity to your insurance program before you mobilize.

Indemnification in subcontracts

Prime contractors often flow indemnity downstream to subcontractors. Subs should verify:

• Scope of covered claims
• Whether defence costs are included
• Conflicts with workers' comp exclusivity rules
• Caps and carve-outs for owner negligence

On the job

Never sign "standard" indemnity blind. Standard for them is not standard for you.

Ask counsel on broad form clauses. One paragraph can void years of profit.

Align indemnity with insurance certificates. Gaps show up after a claim, not before.

Note

This is general info, not legal advice. Indemnity enforceability depends on jurisdiction and contract facts. Consult a construction attorney before signing broad indemnification.