Don't Get Burned By A Hold Harmless Agreement!

Be careful when signing a contract that contains a "hold-harmless" clause. Many are designed to best serve the interests of your client, instead of you. The following examples show how hold harmless agreements differ - and what they can mean to your business:

Limited: You agree to indemnify and hold harmless your client if a claim, demand or suit is brought against your client because of your direct negligent acts. From your perspective, this would be an ideal hold harmless clause, because you assume responsibility for only your "DIRECT" negligent acts or the acts of your employees. You would not be responsible for the negligent acts of your client whether active or passive.

Intermediate: You agree to indemnity and hold harmless your client if a claim, demand or suit is brought against them because of your negligent acts, including indirect acts. As a result, you could be responsible for acts that your employees had no direct involvement in, but could have been averted if properly staffed, trained and supervised. Your client might be equally liable but because of the indemnification provision, you and your insurer maintain additional obligations to defend and indemnify your client.

Broad: The security company assumes responsibility for all liability arising out of an occurrence, even if the client is solely responsible. By signing a broad form hold harmless agreement you are possibly exposing your company to uninsurable risk. Contractual Liability Coverage for sole or gross negligent acts of your client is excluded is y most liability policies.

The Bottom Line: If you are reviewing a contract that contains hold harmless/indemnification clauses, try and make sure that limited form wording is used. lf for some reason this cannot be negotiated, use the intermediate form as your second choice. lf at all possible, stay away from the broad hold harmless provision. As with all contracts, it is best to have legal counsel review prior to signing.