Indemnification Clauses: Understanding Your Exposure
Indemnification clauses can make you liable for accidents you didn't cause—even the GC's own negligence. Most states ban this, but you need to know your rights.
What Is an Indemnification Clause?
An indemnification clause is a contract provision that shifts legal and financial responsibility for certain losses from one party to another. In construction, the GC typically requires subcontractors to "indemnify, defend, and hold harmless" the GC from claims arising from the work.
The critical question is: what claims are you agreeing to cover? A reasonable clause covers only your own negligence. An abusive clause tries to make you cover the GC's mistakes too.
Why This Matters
A worker falls because the GC didn't secure a scaffolding properly. Under a "broad form" indemnity clause, you—the electrical subcontractor working on the other side of the building—might have to pay for that claim. This is why most states have banned such clauses.
The Three Types of Indemnity Clauses
Broad Form (Type I)
EXTREME RISKRequires subcontractor to indemnify for ALL claims, including the GC's own negligence.
Status: Void in most states
Intermediate Form (Type II)
HIGH RISKRequires subcontractor to indemnify except for GC's SOLE negligence.
Status: Enforceable in some states
Limited Form (Type III)
ACCEPTABLE RISKRequires subcontractor to indemnify only for claims arising from subcontractor's own negligence.
Status: Enforceable everywhere
Anti-Indemnity Statutes by State
Most states have laws that void broad form indemnity clauses in construction contracts. Here's what protects you.
| State | Statute | Protection |
|---|---|---|
| Texas | Insurance Code §151.102 | Voids broad form indemnity |
| California | Civil Code §2782 | Voids indemnity for sole negligence/willful misconduct |
| Florida | Statutes §725.06 | Voids indemnity for sole negligence |
| New York | General Obligations Law §5-322.1 | Voids broad form indemnity |
| Georgia | Code §13-8-2(b) | Voids indemnity for sole negligence |
| Colorado | C.R.S. §13-21-111.5 | Voids indemnity for negligence |
| Arizona | A.R.S. §32-1159 | Voids broad form indemnity (residential) |
| Washington | RCW 4.24.115 | Voids indemnity for negligence |
| Illinois | 740 ILCS 35/1 | Voids broad form indemnity |
| Ohio | R.C. §2305.31 | Voids indemnity for sole negligence |
* This is general information, not legal advice. Statutes may have exceptions; consult a licensed attorney.
Red Flag Language to Watch For
"Subcontractor shall indemnify, defend, and hold harmless Contractor from ANY and ALL claims..."
"...regardless of whether caused in whole or in part by Contractor's negligence"
"...including claims arising from Contractor's sole negligence"
"Subcontractor's indemnification obligation shall apply to the fullest extent permitted by law"
"...even if such claims result from the concurrent negligence of Contractor"
Know Your Indemnity Exposure Before You Sign
Upload your contract and get instant detection of broad form indemnity clauses—plus state-specific statute citations.
60-day money-back guarantee
Frequently Asked Questions
What is broad form indemnification?
Broad form (Type I) indemnification requires the subcontractor to indemnify and hold harmless the contractor for ALL claims, including those arising from the contractor's own negligence. Most states have enacted anti-indemnity statutes that void these clauses in construction contracts because they are considered unconscionable.
Are anti-indemnity statutes the same in every state?
No. While most states have anti-indemnity statutes, they vary in scope. Some void clauses requiring indemnification for any negligence of the indemnitee; others only void clauses covering "sole" negligence. Some apply only to construction; others are broader. Always check your specific state's statute for the exact language and exceptions.
What does "indemnify, defend, and hold harmless" mean?
"Indemnify" means to compensate for losses. "Defend" means to pay for legal defense costs (often the most expensive part). "Hold harmless" means to protect from liability. Together, these terms create a comprehensive obligation to cover all costs—financial losses, legal fees, and settlements—related to covered claims.
Should I accept an intermediate form indemnity clause?
Intermediate form clauses (which only exclude the GC's sole negligence) are a judgment call. They're legal in many states and common in the industry. However, you're still taking on risk for accidents where the GC was partially at fault. Consider the project's risk profile, your insurance coverage, and whether you can negotiate to limited form instead.