General Indemnity Clause
Published: October 21, 2026 · Last reviewed: October 21, 2026 · Est. reading time 10 minutes
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In plain language: A general indemnity clause is a contract promise where one business agrees to cover losses caused by its own mistakes. The wording says nothing about the other business's mistakes. Because of that silence, courts in some states let the other business shift only the blame it carries for someone else's actions.
Technical definition: A general indemnity clause is a hold-harmless agreement that refers exclusively to the indemnitor's fault or negligence, without stating how it responds to the indemnitee's fault. Under the law of some states, courts interpret such agreements as transferring only the indemnitee's passive or vicarious liability, not liability for its own active negligence.
General Indemnity Clause at a Glance
The table below summarizes how a general indemnity clause fits into contractual risk transfer and commercial general liability coverage.
| Attribute | Detail |
|---|---|
| Also known as | General hold harmless clause, general form indemnity agreement |
| Category | Contractual risk transfer provision |
| Lines of business | Commercial General Liability, contractual liability |
| Industries most affected | Construction, property management, manufacturing, service contractors |
| Related forms or endorsements | ISO CG 00 01 (insured contract definition), ISO CG 24 26 |
| Who bears the risk | Indemnitee, for its own active negligence |
| Common solution | Clearer indemnity wording plus additional insured status |
| Also interacts with | State anti-indemnity statutes, express negligence rules. |
Key Takeaways
- A general indemnity clause is a contract promise that names only the indemnitor's fault and says nothing about the indemnitee's own negligence.
- Agencies see this narrow wording in leases, subcontracts, and service agreements every day, and the wording decides how much risk a client actually transferred or accepted.
- The most common misunderstanding is assuming a general indemnity promise covers the indemnitee's own negligence, when some states limit the transfer to passive or vicarious liability.
- A quick win is to read the indemnity section of every contract a client signs and confirm the CGL "insured contract" definition responds to the obligation the client assumed.
What Is a General Indemnity Clause in Insurance?
A general indemnity clause is the narrowest common way two parties word a promise to cover the other side's indemnity claims. The indemnifying party agrees to defend and pay for claims arising from its own work or its own negligent acts. The clause never says what happens when the indemnified party is also at fault. That silence is the defining feature.
Contract drafters and courts sort indemnity wording into rough tiers. A limited form covers only the indemnitor's fault. An intermediate form covers shared fault but not the indemnitee's sole negligence. A broad form covers even the indemnitee's sole negligence. General wording sits near the bottom of this ladder, and many states' laws will not read a promise to cover someone's own negligence into silent wording.
Consider a property owner who hires a janitorial company under a service agreement. The agreement says the company will indemnify the owner for "all claims arising from the contractor's negligence." A visitor slips on a freshly mopped floor and also trips on a broken stair the owner never repaired. The janitorial company likely owes indemnity for the wet-floor share of the claim. Whether it owes anything toward the owner's own share depends on the state, the exact words, and the facts.
Every state handles indemnity differently, so no single rule applies everywhere. Some states require an express statement before a party can shift its own negligence. Many states also have anti-indemnity statutes, especially for construction contracts, that void certain broad transfers.
How Does a General Indemnity Clause Work?
- The contract. Two parties sign one of many commercial agreements, such as a lease, subcontract, or service contract, that includes general indemnity wording tied to the indemnitor's fault.
- The injury. A third party suffers bodily injury or property damage connected to the work or premises, causing financial loss and harm to the injured person.
- The lawsuit and tender. An injured party sues the indemnitee, who tenders the claim to the indemnitor and its liability carrier under the contract.
- The fault analysis. Carriers and courts compare the clause wording with how fault splits, and the duty usually requires some negligence by the indemnitor.
- The outcome. Each side pays its share: the indemnitor covers damages, defense costs, and settlement costs tied to its fault, while the indemnitee keeps the share tied to its own active negligence.
Claim Examples Involving General Indemnity Clause
Subcontractor falls where the indemnity covers only passive liability.
A drywall subcontractor signs a subcontract that indemnifies the general contractor for claims "caused by the negligence of the subcontractor." A drywall employee falls through an unguarded floor opening that the general contractor created and left uncovered. The general contractor tenders the claim, but the subcontractor's insurer argues the clause does not reach the contractor's own active negligence. In a state that reads silent wording narrowly, the general contractor absorbs most of the loss under its own CGL policy.
Retail tenant slip-and-fall under a lease with fault-based indemnity wording
A landlord's lease requires a bakery tenant to indemnify the landlord for injuries "arising from the tenant's acts or omissions." A customer slips on flour spilled inside the bakery and sues both parties. The landlord faces liability only because it owns the building, which is a classic passive liability position. The tenant's CGL insurer accepts the tender because the lease qualifies as an insured contract and the tenant's own conduct caused the fall.
Equipment vendor dispute over the scope of indemnity
A manufacturer hires a vendor to service a conveyor and signs a contract with vendor-fault-only indemnity wording. A worker is injured after the vendor reassembles a guard incorrectly and the manufacturer turns off an interlock. Both companies contributed to the loss, and the contract says nothing about the manufacturer's fault. The two insurers dispute how far the clause reaches, and the defense bill grows while the court decides how state law reads the clause.
General Indemnity Clause vs. Broad Form Hold Harmless Agreement: What Is the Difference?
General indemnity wording and the broad form approach both shift liability from one party to another. The general version names only the indemnitor's fault, while the broad form version expressly covers the indemnitee even when it is solely negligent. The table below compares the two.
| Comparison area | General Indemnity Clause | Broad Form Hold Harmless Agreement |
|---|---|---|
| Primary use case | Leases, service contracts, simple subcontracts | Construction contracts favoring owners and general contractors |
| Coverage/concept type | Narrow risk transfer tied to indemnitor fault | Widest risk transfer, including indemnitee sole negligence |
| Typical exclusions | Often excludes indemnitee's active negligence by interpretation | Voided or limited by anti-indemnity statutes in many states |
| Who is most affected by errors? | Indemnitee expecting full protection | Indemnitor and its insurer assuming large exposure |
| Common mistakes | Assuming silence equals full transfer | Assuming the clause is enforceable in every state |
What Are the Most Common Mistakes With a General Indemnity Clause?
- Treating silence as broad coverage. An indemnitee who assumes silent wording covers its own negligence can face an uninsured share of a lawsuit.
- Skipping the contract review. A CSR who never reads the indemnity section cannot tell whether the client's CGL policy responds, which creates E&O exposure for the agency.
- Ignoring state law. Indemnity rules vary by state, and a clause that works in one state may transfer far less in another.
- Confusing indemnity with additional insured status. An indemnity promise is a contract obligation, while additional insured status is direct coverage under another party's policy; clients usually need both.
- Overlooking limitations and exclusions. Endorsements such as ISO CG 24 26 can narrow the insured contract definition, so contractual liability coverage may not match the promise the client signed.
- Missing carve-outs. Many contracts exclude gross negligence or willful misconduct, and clients often miss these carve-outs until a claim tests them.
How to Explain General Indemnity Clause to a Client
Explaining General Indemnity Clause to a personal lines client
Some contracts include a promise to pay for problems you cause. If you rent a vacation home and the rental agreement has one, you agree to cover damage or injuries that come from your own carelessness. The owner still answers for problems the owner caused. Your homeowners or renters policy may help, but the answer depends on your policy wording.
Explaining General Indemnity Clause to a small business owner
Your contract says you will cover claims caused by your work, and it says nothing about mistakes the other company makes. In many states, that means you won't pay for their own negligence. Your general liability policy usually covers this kind of promise when the contract counts as an "insured contract." Send us contracts before you sign so we can confirm the coverage lines up.
Explaining General Indemnity Clause to a CFO or risk manager
General indemnity wording allocates loss only to the extent of the indemnitor's fault, and several jurisdictions limit it to passive or vicarious liability. For risk allocation and risk mitigation planning, treat it as a narrow transfer. Pair it with additional insured endorsements, primary and noncontributory wording, and a clear cap on liability where state law allows. Your legal counsel should confirm enforceability in each state where you operate.
Frequently Asked Questions About General Indemnity Clause
Does the clause cover the indemnitee's own negligence?
Usually not, and the answer depends on state law. Some courts read silent wording as transferring only the indemnitee's passive or vicarious liability. If a party wants protection for its own negligence, contract drafters typically spell that out, subject to any anti-indemnity statute.
What are the usual indemnity triggers?
Most wording of this type ties the duty to claims "arising from" or "caused by" the indemnitor's work or negligence. A third-party injury or property damage claim connected to that work usually starts the duty. The exact trigger language matters, so each contract needs a careful read.
Does a general liability policy cover indemnity obligations in a contract?
The ISO CG 00 01 policy can cover these contract promises when the contract meets the "insured contract" definition. That definition reaches the part of a business contract where the insured assumes another party's tort liability for bodily injury or property damage. Endorsements and carrier forms can change this, so check the actual policy.
Are attorney fees covered under fault-based indemnity wording?
Many indemnity provisions include defense costs, attorney fees, and legal fees. Whether the indemnitor's insurer pays those costs depends on the policy wording and on conditions in the insured contract provisions. Some contracts also allow fee recovery as one of the contractual remedies for breach of contract.
How does this wording affect risk management for contractors?
Contractors face indemnity exposure on almost every project, both as indemnitors to owners and as indemnitees of subcontractors. Silent wording gives narrow protection, so contractors often rely on additional insured status for the rest. Smart contract review means matching each contract's wording to the policies that back it.
Sources and References
- IRMI. General Indemnity Clause.
- IRMI. Hold Harmless Agreement.