Indemnity Agreement

What is an indemnity agreement, sometimes called a hold harmless agreement, and how is it used?  Before you agree to enter into such an agreement, you should first learn what to look for.

Whenever two parties carry out any business together, it’s common for them to use an indemnity agreement. All too often people will sign an indemnity agreement or hold harmless agreement without realizing what they are agreeing too. The following information is a brief overview of the agreement:

An indemnity agreement defends one part against lawsuits and claims for an action the other party did, or for they neglected to do. After executing the indemnity agreement, one person (called the indemnitor), agree to pay for all lawsuits, judgments, damages, or fines made against the other (called the indemnitee). Often included as clauses in other contracts, indemnification provisions can be used almost anywhere. An attorney drafted indemnity clause may look something like this:


Indemnitor agrees to indemnify and hold harmless indemnitee and its officers, directors, shareholders, members, employees, and agents, and their respective successors and assigns, against any loss, liability, damage, cause of action, cost, or expense of any nature whatsoever, including without limitation reasonable attorney’s fees and other legal costs (whether or not suit is brought), arising from the following:  (The indemnity agreement would then go on to describe the activities covered by it.)

What do I need to look out for if I’m asked to sign an indemnity agreement?  Blanket indemnification statements that absolve a party of all responsibility should be carefully examined, and provisions for what the indemnitee can be held responsible for should also be reviewed carefully, preferably by an attorney.

The areas and businesses where these agreements can be used is ever expanding, you should consider using this type of contract whenever you hire an outside company or individual to work for you. Since you can’t control everything that party does, protecting yourself from mistakes or actions they take is wise. Also, if you own a business whose activities or entertainment has some risk involved to your customers, you should consider using an indemnity agreement to protect yourself against injuries your customers might suffer. The following is a list of industries and professionals in which such agreements are typically used:

  • General contractors
  • Landlords who lease any type of rental property
  • Those who are buying a business
  • Owners of retail stores
  • Manufacturers
  • Physicians and other medical professionals
  • Insurance companies
  • Real estate brokers and agents
  • Distribution companies

What should be included in the agreement?  Indemnification agreements need to state exactly what an indemnitor is and is not agreeing to. This should include as many specifics as possible, including dates, indemnification procedures, assumption of defense, advancement of expenses, exclusions, forms of notification, etc.