Did You Agree to Indemnify, Defend, and Hold Harmless?

The following article was written by Miami Construction Lawyer Alex Barthet and appeared first on TheLienZone. It was re-posted with permission. For more information about Alex and his firm, please visit www.TheLienZone.com and www.Barthet.com.

See below for some great information on the terms indemnify, defend, and hold harmless.  Do not hesitate to call us here at Licenses, Etc.! If we don’t have the information, we can find it for you!

Most contractors assume these terms are interchangeable and have the same meaning. They would be wrong.

In reality, these provisions are not the same, and each has very different and serious implications.

Hold harmless. If drafted correctly, a “hold harmless” clause has the effect of having the holder avoid liability for certain damages or claims as set out in an agreement. Typically, a contractor would be agreeing to hold the homeowner harmless from liability, or a subcontractor would hold the GC harmless. In either case, if a claim is made, the one in whose favor the hold harmless is written gets to transfer the claim to the one who agreed to hold them harmless.

Indemnify. This clause not only shifts liability from one party to another but requires the indemnifying party to compensate the indemnified party for any loss. Indemnification clauses, more so than a hold harmless or duty to defend, need to be drafted carefully and in accordance with applicable guidelines which differ from jurisdiction to jurisdiction. Not crafted correctly, they will be unenforceable.

Duty to defend. This clause means just what it says and is a separate and distinct obligation from any duty to indemnify or a duty to hold harmless. The duty to defend requires one to provide a defense and pay the legal expenses associated with such defense—no small obligation, especially when you consider this duty is triggered whatever the merits of the claim may be.

Because construction disputes so often involve multiple parties and complex issues, the potential costs associated with each of these provisions can be very significant. Indeed, the cost of a legal defense can quickly outpace the cost of the actual underlying claim. For example, a plumber brought in on a house remodel might only have a $10,000 contract to re-pipe the master bathroom. But when the plumber not only agrees to hold the G.C. harmless but also to indemnify and defend the G.C. if a claim arises associated with the plumber’s work, the plumber might find himself with an obligation many times larger than his contract and his insurance limits.

When confronted with any of these clauses, step back.  Read them carefully and reach out to your construction adviser.

At Licenses, Etc., we offer a fast and easy  contractor license application process for our contractor clients in Florida and other states. We are a Florida contractor licensing company. Contact us at Licenses, Etc., to get your Florida contractor’s license today by clicking Florida contractor’s license  page or calling 239-777-1028.