Insurance Curator Indemnity and hold harmless clauses are among the most consequential contract provisions for HVAC contractors in the United States. They determine who pays when something goes wrong, and they directly influence underwriting decisions, endorsements, and premiums. This article explains how these clauses interact with typical HVAC insurance policies, shows real-world cost impacts for selected U.S. locations, and provides practical steps to limit exposure.
Why this matters for HVAC contractors (USA-focused)
- HVAC work is high-risk: heavy equipment, rooftop jobs, confined spaces, and frequent interaction with clients’ property increase liability.
- Contracts shift financial risk: Owners, general contractors (GCs), and facility managers routinely use indemnity clauses to transfer risk to subs.
- Insurers react: Broad contractual indemnity demands can trigger higher premiums, exclusions, or denial of coverage unless addressed with endorsements.
How indemnity and hold harmless clauses work — basic mechanics
- Indemnity clause: One party (the indemnitor) agrees to reimburse the other for loss or damage arising out of specified liabilities.
- Hold harmless: A variant of indemnity focused on preventing the indemnitee from pursuing damages against the indemnitor.
- Scope matters: Clauses may be limited (negligence-based) or broad (including indemnitee’s own negligence).
Types of indemnity commonly seen:
- Broad form indemnity — obligates the contractor to indemnify the indemnitee even for the indemnitee’s sole negligence (very risky).
- Intermediate form — contractor indemnifies for the contractor’s negligence and for claims where both parties share fault.
- Limited/formal/negligence-only — the contractor indemnifies only for its own negligence (preferred).
How indemnity clauses interact with typical HVAC insurance
General Liability (GL) and the Contractual Liability Exclusion
Insurance policies typically contain a contractual liability exclusion which limits coverage for liabilities the insured assumes under contract. However:
- GL policies often cover insured contracts (e.g., certain indemnity obligations) up to specified limits — check policy language and ISO forms.
- If a contract requires you to indemnify for the other party’s negligence, many insurers will either:
- Add an additional premium, or
- Issue an endorsement limiting coverage, or
- Decline to insure that portion (leaving you exposed).
Additional Insured Endorsements
Clients and GCs routinely demand to be named additional insureds on the HVAC contractor’s GL policy. That:
- Extends defense and indemnity benefits to the client for claims arising out of your work.
- Often increases premiums modestly, but can have larger underwriting impacts if broad endorsements are required (e.g., ISO CG 20 10 forms vs. more expansive CG 20 37).
See more on this in Additional Insured Endorsements: Why Clients Require Them and How They Impact Your Policy.
Waiver of Subrogation
Agreements that require you to waive subrogation prevent your insurer from recovering costs from the client after paying a claim. Insurers will often add a fee or refuse waiver unless:
- The waiver is mutual, or
- You buy a specific waiver endorsement.
Limits, aggregates, and defense costs
- Demands for higher limits (e.g., $2M/$4M) increase premiums.
- Contracts that require primary and noncontributory coverage expose insurers to first-dollar liability and typically raise rates.
For negotiation strategies on these items, see: How to Push Back on Unreasonable Insurance Requirements in HVAC Contracts.
Real-world pricing: sample cost impact (U.S. cities)
Below are typical annual premium estimates for a mid-sized HVAC subcontractor (5 employees, 2 service vans, $1M/$2M GL limit) in three U.S. metro areas. These are estimates synthesized from market-rate small-business offerings and industry insurer guidance (actual premiums vary by loss history, payroll, revenue, and specific contract terms).
| City (example) | General Liability (GL) | Workers' Comp | Commercial Auto (2 vans) | Additional Insured & Waiver Costs | Estimated Annual Total |
|---|---|---|---|---|---|
| Los Angeles, CA | $1,500 | $18,000 | $3,000 | $700 | $23,200 |
| Houston, TX | $1,000 | $11,000 | $2,500 | $500 | $15,000 |
| New York City, NY | $1,800 | $25,000 | $4,000 | $900 | $31,700 |
Notes:
- Workers' comp in CA and NY is significantly higher due to higher average payroll costs and state rates.
- Additional insured endorsements and waivers add $500–$1,000+ depending on breadth and insurer.
- Sources and market examples: insurer small-business pages and contractor program resources such as Next Insurance, Hiscox, and The Hartford provide starting prices and program details: Next Insurance general liability pricing, Hiscox small business GL, The Hartford contractors insurance. (See links below.)
External reference links:
- Next Insurance — general liability: https://www.nextinsurance.com/business-insurance/general-liability-insurance/
- Hiscox — small business general liability: https://www.hiscox.com/small-business-insurance/general-liability-insurance
- The Hartford — contractors insurance: https://www.thehartford.com/business-insurance/contractors
How insurers and underwriters actually respond
- Underwriters review contracts. Broad indemnity and “hold harmless” clauses increase underwriting scrutiny.
- Some insurers will require you to purchase a contractual liability buyback endorsement or special wording to restore coverage for contractual obligations.
- Others will exclude coverage for indemnities that hold the insured responsible for the indemnitee’s sole negligence.
- Repeated acceptance of broad indemnities increases loss frequency exposure and can push you into higher commercial-insurer tiers or captive/alternative markets.
For deeper reading on contractual influence on premiums: How Contractual Risk Transfer Can Reduce Insurance Costs — And When It Fails.
Practical steps HVAC contractors should take (checklist)
- Review contract language before signing. Watch for “to the fullest extent permitted by law,” “indemnify for indemnitee’s negligence,” “primary and noncontributory,” and unlimited dollar caps.
- Seek limited/negligence-only indemnity or mutual indemnity when possible.
- Cap liability by tying indemnity to contract value (e.g., “liability not to exceed contract value or $X”).
- Request additional insured wording limitations — limit to work performed by you and to ongoing operations, and avoid completed operations breadth if possible.
- Buy contractual liability buy-back endorsements where available to restore GL coverage for certain indemnities.
- Use standard ISO additional insured forms (or negotiated language) rather than ad hoc, expansive endorsements.
- Compare insurer contractor programs — The Hartford, Next Insurance, Hiscox, Travelers and others have tailored contractor packages. For many small HVAC firms, Next and Hiscox advertise GL starts in the low hundreds per year depending on business profile.
- Document negotiations and send required endorsements to the client/GC promptly.
See sample contract language and negotiation templates: Sample Contract Language for HVAC Contractors That Limits Insurance Exposure.
Negotiation tips for high-risk clauses
- Propose mutual indemnity for third-party claims.
- Limit indemnity to claims arising from contractor’s negligence.
- Add a “sole negligence” carve-out preventing indemnification for the other party’s sole negligence.
- Tie indemnity cap to insurance limits: “Contractor’s obligation to indemnify shall not exceed the coverage limits of contractor’s insurance.”
For a practical negotiation playbook, read: Key Contract Clauses HVAC Contractors Must Negotiate: Indemnity, Additional Insureds and Limits.
Final considerations
- Unreasonable indemnity demands are not “standard” — they have real cost and coverage implications. Don’t assume your GL policy will automatically defend or indemnify every contractual obligation.
- Get counsel: involve your insurance broker and, for large projects, construction counsel to redact or limit exposure.
- Shop the market: different insurers handle contractual clauses differently — getting quotes from specialized carrier programs (Next Insurance, Hiscox, The Hartford, Travelers) can reveal cost-effective solutions.
If you need a contract review checklist or sample indemnity language tailored to your state (e.g., California or Texas), consult your broker or an attorney experienced in construction risk transfer.