Commercial Insurance · Texas
Hold Harmless and Indemnity Clauses in Texas: What You Just Agreed To (and What Your Insurance Will Actually Pay)
The two words that move somebody else’s lawsuit onto your policy — and the Texas statutes that decide how far that move actually goes.
TL;DR FOR BUSY PEOPLE
A hold harmless or indemnity clause is a promise to absorb someone else’s legal liability. In Texas, that promise is usually enforceable — with a large exception: on construction contracts, the Texas Insurance Code voids it to the extent it covers the other party’s own fault, and voids the matching additional insured requirement right along with it. Your general liability policy may fund the part that survives, through a narrow exception buried in the exclusions. One endorsement can take that exception away.
FAST ANSWER
- Generally yes, hold harmless and indemnity clauses are enforceable in Texas — but if the agreement is a construction contract, Texas Insurance Code §151.102 makes the clause void as against public policy to the extent it requires you to cover the other party’s negligence, statutory violation, or breach.
- The Texas nuance most people miss: §151.104 applies that same limit to additional insured requirements, so the old workaround of demanding additional insured status instead of indemnity was closed in the same statute.
- The financial impact: standard general liability forms exclude liability you assume by contract, then give it back for an “insured contract.” If your policy carries a contractual liability limitation endorsement, an indemnity you signed may be an obligation you fund yourself.
The 43-page subcontract and the sentence nobody read
It is 9:40 on a Tuesday night in a jobsite trailer off Legacy Drive. The framing sub has the contract on a folding table, a cold taco in one hand, and a crew that needs to be on site Thursday. Page 1 is the scope. Page 2 is the money. Somewhere around page 19, in the same typeface as everything else, sits a paragraph that begins “Subcontractor shall indemnify, defend, and hold harmless Contractor, Owner, and their respective agents…” and runs on for nine lines without stopping for air.
He signs it. Of course he signs it. Everyone signs it. Fourteen months later a laborer he never hired falls off a scaffold he never built, and a lawyer he has never met sends him a letter explaining that page 19 has made the accident his problem. That letter is the moment most business owners in Frisco, Plano, McKinney, and Little Elm learn what an indemnity clause is. It is a bad moment to learn it. The good news, and there is real good news here, is that Texas law read page 19 before he did, and it does not enforce all of it. Let’s take the whole thing apart.
One note before we start: this is educational information about how these clauses and insurance policies generally interact. It is not legal advice, and it is not a coverage opinion on your contract or your policy. Contract language is specific, and so are policy forms. Have your attorney read the clause and have a licensed agent read the policy — ideally before you sign, and ideally the same week.
What a hold harmless clause actually does
Strip away the drafting and you are left with one mechanic. Ordinarily, the law decides who pays for an accident by asking who caused it. An indemnity provision replaces that question with a different one: who signed. The party making the promise is the indemnitor. The party receiving it is the indemnitee. “Hold harmless” and “indemnify” are usually written together as a matched pair, and Texas courts have treated the pair as accomplishing the same essential thing — an advance shifting of responsibility from one party to another.
Here is the part worth sitting with. This is not insurance. Insurance is a promise from a regulated, capitalized company that files its forms and holds reserves against the day it has to pay. An indemnity clause is a promise from whoever signed the contract, backed by whatever that company happens to have in the bank. If the indemnitor is a two-truck outfit and the claim is seven figures, the clause is worth exactly what the two trucks are worth. Solomon saw this coming three thousand years ago: “Be not thou one of them that strike hands, or of them that are sureties for debts. If thou hast nothing to pay, why should he take away thy bed from under thee?” (Proverbs 22:26–27, KJV). The clause does not create money. It only decides whose money it is.
Which is why indemnity and insurance are always sold as a package. The contract shifts the liability; the policy is supposed to fund it. When those two documents don’t line up, the gap between them is paid out of your operating account.
Indemnity clauses come in three widths, and the width is the whole ballgame:
- Limited form. You cover claims to the extent of your own fault. Clean, proportional, and the version a well-run business should be pushing for.
- Intermediate form. You cover your own fault and shared fault — you pick up the tab whenever you are even partly responsible, including for the other side’s share.
- Broad form. You cover the other party’s negligence too, including situations where you did nothing wrong at all. This is the version that gets voided in Texas construction contracts, and it is still the version most out-of-state contract templates open with.
Sitting beside indemnity you will usually find its two cousins: additional insured status, which puts the other party directly onto your liability policy — commonly by an endorsement such as CG 20 10 for ongoing operations — and a waiver of subrogation, which stops your insurer from turning around and suing them after it pays. Many contracts also demand primary and non-contributory wording so your policy pays first and theirs never gets touched. Four separate mechanisms, four separate places to get it wrong, and they show up in one paragraph.
The Texas reality: three statutes and two cases
Texas has been quietly protecting downstream contractors from upstream contract templates for fifty years. Three bodies of law do the work, and knowing which one governs your agreement tells you most of what you need to know.
1. The Texas Anti-Indemnity Act (construction contracts)
Subchapter C of Chapter 151 of the Texas Insurance Code took effect January 1, 2012. Section 151.102 makes a provision in a construction contract void and unenforceable as against public policy to the extent it requires an indemnitor to indemnify, hold harmless, or defend another party against a claim caused by that other party’s negligence or fault, its breach of a statute or regulation, or its breach of contract.
Read the three words “to the extent” again, because they do enormous work. The statute is a scalpel, not a hammer. It does not throw out your indemnity clause. It trims off the part that reaches the other side’s own fault and leaves the rest standing.
Then Section 151.104 closes the escape hatch. Before 2012, a contractor who couldn’t get broad indemnity could simply demand additional insured status instead and get the same economic result through the policy. Section 151.104 makes that requirement void to the same extent the indemnity would be. Indemnity and additional insured coverage now rise and fall together.
Two limits matter enormously in practice. First, Section 151.103 preserves indemnity for claims involving bodily injury or death of the indemnitor’s own employee — including employees of its agents and subcontractors of any tier. That is the single largest category of construction claims, and it survives the Act intact. Second, “construction contract” is defined broadly at Section 151.001(5) to reach design, construction, alteration, renovation, remodeling, repair, maintenance, and even the furnishing of material or equipment for an improvement to real property. Construction lawyers have repeatedly flagged that maintenance agreements, equipment leases, and master service agreements can land inside the statute even when nobody involved thinks of the job as construction. If you run a mechanical, electrical, or facilities-services company on an MSA, this reaches you — and our guide to the insurance questions to ask before signing an MSA goes deeper on that.
Section 151.105 then lists eleven things the subchapter does not affect, including single-family homes, townhouses, duplexes and related land development; public works projects of a municipality; surety indemnity agreements; the benefits of the Texas workers’ compensation system; oilfield agreements governed by Chapter 127; and joint defense agreements entered into after a claim is made. Custom homebuilders in particular should note that residential work sits outside the Act in two separate places.
2. Fair notice: the drafting rules that came first
Long before the statute, Texas courts imposed two requirements on any clause trying to shift liability for the indemnitee’s own negligence. In Ethyl Corp. v. Daniel Construction Co., 725 S.W.2d 705 (Tex. 1987), the Texas Supreme Court adopted the express negligence doctrine: a party seeking indemnity for the consequences of its own negligence must say so in specific terms within the four corners of the contract. “Any and all claims” does not do it. Six years later, in Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993), the court added conspicuousness and extended both requirements to releases as well as indemnity agreements — calling this kind of advance transfer an extraordinary shifting of risk. The clause has to be drafted so it catches the attention of a reasonable person looking at the document.
Dresser is worth remembering because the facts are so ordinary. A logging tool got stuck in a well. A second company was hired to fish it out. Both contracts contained risk-shifting language, both companies assumed they were protected, and the Texas Supreme Court held the provisions were not conspicuous as a matter of law. Two sophisticated energy companies, ordinary contract paper, and the protection they thought they had bought simply wasn’t there.
Note how the statute and the doctrine differ. Fair notice is a drafting problem — write it carefully and conspicuously and it can be fixed. Chapter 151 is not a drafting problem. Within its scope, no amount of capital letters or careful wording resurrects indemnity for the indemnitee’s own fault.
3. The oilfield rules (a different statute entirely)
If the agreement pertains to a well for oil, gas, or water or to a mine for a mineral, you are in Chapter 127 of the Texas Civil Practice and Remedies Code — the Texas Oilfield Anti-Indemnity Act — not Chapter 151. Section 127.003 voids indemnity for the indemnitee’s sole or concurrent negligence. But Section 127.005 preserves the knock-for-knock structure the energy industry runs on: mutual indemnity obligations are enforceable, limited to the extent of the coverage and dollar limits of insurance each party agreed to obtain. In Ken Petroleum Corp. v. Questor Drilling Corp., 24 S.W.3d 344 (Tex. 2000), the Texas Supreme Court addressed what happens when the two sides commit to different amounts, and the Fifth Circuit revisited the same limitation in Cimarex Energy Co. v. CP Well Testing, L.L.C. The practical translation for a service company: in the oil patch, your indemnity promise is only as good as the insurance you actually agreed to carry behind it, and a mismatch between the two sides can quietly reduce what the whole arrangement is worth.
Myths that cost real money
- Myth: “They signed a hold harmless, so they can’t sue me.” Reality: anyone can still file suit, and you can still be named. The clause allocates who ultimately bears the cost between the two contracting parties. It is not a shield at the courthouse door, and it does nothing at all to a third party who never signed it.
- Myth: “I carry general liability, so I’m covered for whatever I sign.” Reality: the standard ISO commercial general liability form (CG 00 01) contains a contractual liability exclusion for bodily injury and property damage the insured is obligated to pay by reason of assuming liability in a contract. Coverage comes back through two exceptions — liability you would have had anyway without the contract, and liability assumed in an “insured contract,” a defined term that includes contracts under which you assume the tort liability of another party. Most ordinary commercial indemnity agreements fall into one of those two lanes. That is the design, not a loophole.
- Myth: “The insured contract exception is automatic.” Reality: it is a policy term, and policy terms get endorsed. The Contractual Liability Limitation endorsement, CG 21 39, deletes the part of the insured contract definition that covers assumed tort liability. A policy carrying it can leave you with a signed indemnity obligation and no coverage standing behind it. This is the single most valuable thing on this page and the single most common thing nobody checks.
- Myth: “The certificate of insurance proves I got what the contract required.” Reality: a certificate is a snapshot for information only. It does not amend the policy, it does not create coverage, and it will happily display a checkbox next to a coverage that an endorsement has gutted. Our guides on what a certificate of insurance actually proves and the COI mistakes that cost Texas contractors jobs cover this in detail.
- Myth: “Texas voids these clauses, so I can sign anything.” Reality: Chapter 151 applies only to construction contracts, only to the extent of the other party’s own fault, and has eleven statutory exclusions plus the employee-claim exception. Your office lease, your vendor agreement, and your event contract are almost certainly outside it.
- Myth: “Indemnity and additional insured are the same thing.” Reality: indemnity is a contractual promise between two businesses. Additional insured status is a coverage grant under a policy, with its own limits and its own exclusions. Texas links them for construction contracts; nothing links them anywhere else. Requiring both, and verifying both, is standard subcontractor vetting practice.
- Myth: “One clause, one policy limit, no problem.” Reality: indemnity obligations stack. A contractor signing twenty subcontracts a year has twenty of these promises outstanding against one shared aggregate — which is exactly the pressure that drives the per-project versus per-policy aggregate conversation.
Get the next one before you sign it
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Six scenarios and how they land
Six situations we see regularly across North Texas. These illustrate how the rules generally operate; the outcome in any real dispute turns on the exact contract wording, the policy forms, and the facts, so treat these as a map rather than a verdict.
| Scenario | Outcome |
|---|---|
| Frisco subcontract requires the sub to indemnify the GC for “any and all claims, including claims caused by Contractor’s negligence.” A jury finds the GC solely at fault. | Under §151.102, the clause is void as against public policy to the extent it reaches the GC’s own fault. The trimmed clause survives for everything else. |
| Same subcontract. The sub’s own employee is injured, and the GC bears part of the fault. | The §151.103 employee-claim exception applies. Indemnity for bodily injury or death of the indemnitor’s employee is not voided by the Act — the largest claim category on most jobsites. |
| A custom homebuilder’s contract on a single-family residence contains broad form indemnity. | Residential work is excluded twice — from the definition of “construction project” at §151.001(2) and again at §151.105(10)(A). Chapter 151 does not limit it; fair notice still does. |
| A Plano retail lease requires the tenant to hold the landlord harmless for claims arising out of the tenant’s use. A customer trips over the tenant’s display. | Not a construction contract, so Chapter 151 doesn’t apply. This is the classic insured contract fact pattern — the tenant’s CGL is generally the policy that responds, subject to its terms and limits. |
| An oilfield MSA has knock-for-knock indemnity, but one party committed to $5M of supporting insurance and the other to $1M. | Chapter 127, not Chapter 151. Under §127.005(b) the mutual obligation is limited to the coverage and limits agreed; where the amounts differ, Texas courts have applied the lower figure. |
| Any of the above, except the CGL carries endorsement CG 21 39. | The assumed-tort-liability branch of the insured contract definition is deleted. The contractual obligation still exists; the coverage that was supposed to fund it may not. |
That last row is not hypothetical, and it is not limited to contractors. Medical practices sign indemnity language constantly — in building leases, equipment agreements, billing and staffing contracts, and vendor terms — and a practice’s package policy is not automatically built to absorb it. If you own a practice, the lease is usually where the exposure hides; we mapped that specific document in our guide to what a Texas medical office lease requires. Worth adding: an indemnity tied to professional services is a different animal from one tied to premises or operations, and the two sit on different policies — the distinction we walk through in general liability versus professional liability in Texas.
KEY FINDINGS (SEPTEMBER 2026)
- Texas Insurance Code §151.102, added by Acts 2011, 82nd Legislature, ch. 1292 (HB 2093) and effective January 1, 2012, makes a construction-contract indemnity provision void and unenforceable as against public policy to the extent it covers the indemnitee’s own negligence, fault, statutory violation, or breach of contract.
- Section 151.104 extends the same limit to additional insured requirements and endorsements, closing the pre-2012 practice of substituting additional insured status for prohibited indemnity. Texas is one of a minority of states whose anti-indemnity statute reaches the insurance requirement as well as the contract clause.
- Section 151.103 preserves indemnity for claims involving bodily injury or death of the indemnitor’s employee, agent, or subcontractor of any tier — and §151.105 lists eleven further exclusions, including single-family and townhouse residential work, municipal public works projects, surety indemnity agreements, and joint defense agreements entered after a claim is made.
- Two Texas Supreme Court decisions still govern drafting: Ethyl Corp. v. Daniel Construction Co., 725 S.W.2d 705 (Tex. 1987), requiring express negligence language within the four corners of the contract, and Dresser Industries v. Page Petroleum, 853 S.W.2d 505 (Tex. 1993), adding conspicuousness and extending both requirements to releases. For oilfield agreements, Texas Civil Practice and Remedies Code §127.005(b) caps mutual indemnity at the insurance limits the parties agreed to obtain.
How The Agent’s Office® handles this
Most agencies handle indemnity requirements by issuing a certificate. Someone emails the contract requirements over, a certificate goes out matching the boxes, and everyone moves on. That process confirms that limits exist. It confirms nothing about whether the coverage behind those limits will respond to what you signed.
We work the other direction, and it takes about twenty minutes. We read the indemnity paragraph and identify its form — limited, intermediate, or broad. We check whether the agreement is likely to fall inside Chapter 151, Chapter 127, or neither, because that determines what is enforceable before insurance is even discussed. Then we pull your actual policy — not the certificate, the policy — and read the endorsement schedule to see whether the insured contract definition is intact or has been narrowed, whether the additional insured endorsements match what the contract demands, whether primary and non-contributory wording is present, and whether the aggregate is structured to survive the number of contracts you have open. Where the contract asks for something the policy cannot deliver, you get told before you sign, not after a claim.
We are independent, which is why this works. With access to more than 75 carriers, when one market’s form won’t support the contract in front of you, we go find one that will instead of explaining why you should accept the gap. And we are here — inside Frisco Station, working with businesses from Frisco and the surrounding corridor out through the 380 stretch. If you’d like the underlying coverage explained first, start with our Texas general liability insurance guide.
Prudence here is not pessimism. It is stewardship — knowing what you have promised, knowing what stands behind the promise, and being able to sign the next contract without wondering which page will come back for you.
Ready to see your real options?
Bring us the contract and the policy. We’ll tell you which parts of that indemnity clause Texas will actually enforce, whether your coverage is built to stand behind it, and what it costs to close the gap — compared across multiple carriers, not just the one that happens to have your renewal.
FAQs about this topic
Are hold harmless agreements enforceable in Texas?
Generally yes, but with important limits. If the agreement is a construction contract, Texas Insurance Code §151.102 makes it void and unenforceable to the extent it requires you to indemnify another party against a claim caused by that party’s own negligence, fault, statutory violation, or breach of contract. Outside construction, clauses shifting liability for the other party’s own negligence must satisfy the express negligence doctrine and be conspicuous under Ethyl Corp. v. Daniel Construction Co. (1987) and Dresser Industries v. Page Petroleum (1993). Whether a specific clause is enforceable is a legal question for your attorney.
Does general liability insurance cover an indemnity clause I signed?
Often, but not automatically. Standard commercial general liability forms exclude bodily injury and property damage the insured must pay because it assumed liability in a contract, then restore coverage in two situations: liability you would have had even without the contract, and liability assumed in an “insured contract,” which includes contracts where you assume the tort liability of another party. Most routine commercial indemnity agreements fall within one of those exceptions. However, the Contractual Liability Limitation endorsement (CG 21 39) removes the assumed-tort-liability portion of that definition, so the answer depends on your specific policy and endorsements.
What is the difference between indemnity and additional insured status?
Indemnity is a promise between two businesses inside a contract, backed by the indemnitor’s own assets and insurance. Additional insured status is a coverage grant made under an insurance policy through an endorsement, giving the other party rights directly against your insurer, subject to that policy’s limits, terms, and exclusions. Texas Insurance Code §151.104 links the two for construction contracts by voiding an additional insured requirement to the same extent the underlying indemnity would be void. Contracts commonly require both, and each has to be verified separately.
Does the Texas Anti-Indemnity Act apply to residential construction?
No. A single family house, townhouse, duplex, or land development directly related to them is excluded from the definition of “construction project” in §151.001(2), and §151.105(10)(A) separately excludes indemnity provisions in contracts pertaining to that work. Residential builders and remodelers are therefore outside the Act, though the common-law fair notice requirements of express negligence and conspicuousness still apply to any clause shifting liability for another party’s own negligence.
Can I be required to indemnify a general contractor for my own employee’s injury in Texas?
Yes. Section 151.103 provides that §151.102 does not apply to a provision requiring indemnity for a claim involving the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier. This employee-claim exception preserves a large share of construction indemnity obligations, which is why subcontractors should confirm how their general liability and workers’ compensation programs interact before signing.
Do oilfield contracts follow the same indemnity rules?
No. Agreements pertaining to a well for oil, gas, or water or to a mine for a mineral fall under Chapter 127 of the Texas Civil Practice and Remedies Code, and §151.105(7) expressly excludes them from the construction statute. Section 127.003 voids indemnity for the indemnitee’s sole or concurrent negligence, while §127.005 permits mutual “knock-for-knock” indemnity limited to the coverage and dollar limits of insurance each party agreed to obtain. Where the two sides commit to different amounts, Texas courts have applied the lower figure.
You might also like:
Certificate of Insurance (COI) Explained: The Texas Business Guide (2026)
What a certificate actually proves, what it never proves, and why a checked box is not coverage.
5 Insurance Questions to Ask Before Signing an MSA
The master service agreement questions that decide whether your policy can support what you signed.
Texas General Liability Insurance Guide (2026): Coverage, Costs & Exclusions
The policy underneath every indemnity conversation — what it covers, what it excludes, and what it costs.
George Azide
LOCAL, INDEPENDENT AGENCY
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