What's the difference between indemnity and a hold harmless clause?

What does indemnity cover?

An indemnity clause focuses on financial responsibility. One party agrees to cover losses, damages, or legal costs if certain events occur.

This usually includes reimbursing the other party for claims, settlements, or attorney fees tied to the indemnifying party's actions.

How is hold harmless different from indemnity?

A hold harmless clause is broader in how it's often used. It means one party agrees not to hold the other liable for certain risks.

In practice, many contracts combine both ideas. Language like "indemnify and hold harmless" can include both paying for losses and protecting against being blamed or pursued for those losses.

What to do next...

1. Check if your contract uses both terms together.
2. Review what risks and costs are actually covered.
3. Look for duties like defense, payment, or both.
4. Make sure the clause matches your real business risks.

What to consider in your specific situation

While these clauses are related, their impact depends on how they are written in your contract.

• The exact wording and scope of each clause.
• Whether the clause includes defense, payment, or both.
• The type of services or risks involved.
• Local laws that affect enforceability.
• Whether the clause is one-sided or mutual.
• The potential size of claims or legal costs.

Understanding how these clauses work together can help you better manage risk in your agreements. Since every situation is different, consider more information through Rocket Copilot, a Legal Pro, or a legal document review to move forward with confidence.