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Defend, Indemnify, and Hold Harmless? Is There Any Difference?

by Monica L. Freeman, Woods & Aitken LLP

Virtually all construction contracts contain indemnification provisions. While provisions may vary in length and complexity, one important thing to think about when drafting or reviewing an indemnification provision is the specific indemnity-related obligation you have been asked to undertake or you are expecting the other party to undertake. Most indemnification provisions contain one of more of the above terms (i.e. defend, indemnify and/or hold harmless) to set forth the indemnity obligation. It is often taken for granted that the terms can be used interchangeably, but that is not necessarily the case.


1. Agreement to Defend
The agreement to defend is probably the most distinguishable term in the typical indemnification agreement. Defend is defined to mean “to deny, contest, or oppose” or to “represent (someone) as an attorney”.1 By agreeing to defend someone in an indemnification agreement it is generally understood that the indemnitor will accept the tender of defense of the claims against the indemnitee and will be responsible for defense costs. In certain cases the agreement to defend may result in the indemnitor taking on the actual defense of the indemnitee. When this occurs there may be dual representation of the indemnitee and indemnitor by the same counsel, assuming there are no conflicts in that dual representation.


In the insurance context (which is analogous to contractual indemnity), an insurer’s duty to defend is broader than its duty to indemnify. An insurer has a duty to defend if (1) the allegations of the complaint, if true, would obligate the insurer to indemnity, or (2) a reasonable investigation of the actual facts by the insurer would or does disclose facts that would obligate the insurer to indemnify.2 In considering whether it has a duty to defend, an insurer must look not only to what is alleged in the suit against its insured but must also "investigate and ascertain the relevant facts from all available sources."3 Thus the obligation to defend arises at the outset of the claim, normally before any allocation of liability has been established.


As a practical matter, as the indemnitee, when deciding whether to include a “duty to defend” in your contract, consider whether you want to engage your own counsel and retain control over your defense, rather than placing that responsibility with the indemnitor. If so, you can either exclude the “duty to defend” language or place conditions on the duty to defend that allow you to maintain control while still allocating the costs of the defense to the indemnitor.


2. Agreement to Indemnify
The agreement to indemnify is generally understood to be an agreement of reimbursement where the indemnitor will reimburse the indemnitee for costs, damages, and expenses that are subject to the indemnification agreement. Indemnify is defined to mean “[t]o reimburse (another) for a loss suffered because of a third party’s or one’s own act or default.”4 When the agreement arises out of an express agreement, the scope and terms of the indemnification obligation are governed by the terms of that contract. It is important to be mindful of the specific loss for which you are either seeking or providing indemnity (i.e. cost, damage, expense, liability, claim, loss, attorney fees, etc.).


3. Agreement to Hold Harmless
Certain authorities suggest that an agreement to hold harmless is synonymous with an agreement to indemnify.5 Specifically, Black’s Law Dictionary defines it to mean, “[t]o absolve (another party) from any responsibility for damage or other liability arising from the transaction; INDEMNIFY.”6 However, other authorities have construed an agreement to “hold harmless” not as a requirement to reimburse, but rather a prohibition of any suit by the indemnitor against the indemnitee to seek reimbursement for identified damages.7 This author is not aware of any Nebraska cases that specifically make a distinction between agreements to “indemnify” and those to “hold harmless” and in practice such terms appear to be used interchangeably. In general it is advisable to include both terms.


Before you sign a contract containing an indemnification provision it is important to understand whether your obligation is to (1) defend, (2) indemnify, or (3) hold harmless, or any combination of the three. The obligation you take on will directly impact your role in the defense of a claim, your responsibility for attorney fees relating to the claim, and your ultimate responsibility for indemnity. Remember that your legal counsel is a great resource when you need assistance to understand the legal impact of a proposed indemnification provision.


1 Black’s Law Dictionary 450 (8th ed. 2004).
2 John Markel Ford v. Auto-Owners Ins. Co., 543 N.W.2d 173, 179 (Neb. 1996).
3 Mapes Industries, Inc. v. USF&G, 560 N.W.2d 874 (Neb. 1997).
4 Black’s Law Dictionary 783-84 (8th ed. 2004).
5 Charles Brocato, Jr., The Transactional Lawyer, Vol. 1 (Oct. 2011).
6 Black’s Law Dictionary 749 (8th ed. 2004).
7 Id. See Queen Villas Homeowners Ass’n v. TCB Property Mgmt., 56 Cal. Rptr. 3d 528, 534 (Cal. Dist. Ct. App. 2007) (finding that a right to be indemnified is “offensive” and a right to be held harmless is “defensive”); Majkowski v. American Imaging Mgmt. Services, LLC, 913 A.2d 572, 592 n.55 (Del. Ch. Ct. 2006) (“the word indemnify generally grants rights, and the phrase hold harmless generally limits liability.”).