Hold Harmless Agreements for Contractors on Septic Jobs

A hold harmless agreement is a contract clause that moves responsibility for a loss from one party to another, and on a septic job it usually sits in a builder’s subcontract or an owner’s work agreement. This post is educational and is not legal advice; have an attorney licensed in your state review any contract before you sign it.

What a hold harmless clause does on a septic job

A hold harmless clause shifts who answers for a loss, before anyone knows what the loss will be. The University of Wisconsin risk management manual describes these clauses as contractual transfers of responsibility for a loss, and defines the family as “An agreement under which one party shifts to another” some part of that responsibility.

On a septic job, the clause commonly appears in a general contractor’s subcontract for a new home, in a developer’s agreement for a subdivision, or in the terms attached to a repair or pumping ticket. It may ask you to defend and pay for claims arising from your work, from the other party’s work, or from both.

The clause sits alongside the insurance section of the same contract, which may ask for additional insured status, a waiver of subrogation and specific limits. The indemnity promise and the insurance promise are separate obligations, and a contractor can keep one while breaching the other.

Hold harmless, exculpatory and indemnity clauses are not the same

The same manual names three types, and each shifts a different kind of loss. It tells its own staff to classify a clause’s type before accepting it, which is a useful habit for a septic owner reading a builder’s paperwork.

Its hold harmless definition covers tort liability arising from the promising party’s own negligence. That is the narrowest of the three, and it roughly tracks what the law would already put on you for your own mistakes.

Its exculpatory definition absolves the other party even for that party’s own negligence. A clause of that kind asks you to give up a claim you would otherwise have.

Its indemnity definition is the broadest. It asks the promising party to pay the other party “for any damages regardless of who is at fault” on the job. A clause written that way may reach losses you did nothing to cause.

The heading a contract puts above the clause does not settle which type it is. Read what the clause shifts, then decide whether the shift matches the work you are actually doing.

Some state statutes void the broadest construction indemnity

Several states limit indemnity clauses in construction contracts by statute, and the limits differ from state to state. We read five such statutes for this post. None of them names septic, onsite or sewage work specifically; their fit to a septic job rests on their general wording about construction contracts, which in some states expressly include excavation.

Ohio’s construction indemnity statute voids clauses that indemnify the promisee for the promisee’s own negligence. It declares that such a clause is “against public policy and is void” in construction work. It expressly reaches excavating connected with construction work.

Oregon’s construction indemnity statute says a construction indemnity provision for damage caused “by the negligence of the indemnitee is void” under its terms. It applies that rule to indemnity required of a person’s surety or insurer too. Oregon still enforces indemnity to the extent the damage “arises out of the fault of the indemnitor” on the job. Its definition of a construction agreement includes excavation attached to real estate.

Minnesota’s construction indemnity statute voids indemnity in building and construction contracts chiefly except where the fault traces to the promisor’s side, including breach of a specific contractual duty by the promisor. It also allows an owner to indemnify a contractor for environmental strict liability.

California’s indemnity statute voids indemnity for the “sole negligence or willful misconduct of the promisee” in construction contracts. It limits private owners shifting their own active negligence onto contractors, though that owner rule excludes homeowners improving their own single-family dwelling. For residential work, it limits subcontractor indemnity to the subcontractor’s scope of work.

Wisconsin’s statute voids clauses that limit or eliminate tort liability in construction contracts.

These five are the ones we read. Do not assume your state has a statute like them, or that it reads the same way; ask an attorney where you work.

Insurance promises inside the contract

Some statutes treat a promise to buy insurance differently from a promise to indemnify. Minnesota separately permits agreements to provide “specific insurance coverage for the benefit of others” on a project. It voids clauses requiring insurance for another party’s own negligence, but still allows requiring insurance for the promisee’s vicarious liability. It also provides that promising insurance and failing to buy it can create a direct indemnity obligation.

Ohio’s statute still lets anyone buy insurance “for his own protection” against loss. Wisconsin’s statute says it “does not apply to any insurance contract” at all.

For a septic owner, this means the insurance section of a contract deserves the same reading as the indemnity section. If you promise a builder additional insured status and do not arrange it, the promise itself may become the problem. Before signing, check with your agent that what the contract asks for can actually be placed on your general liability policy.

How liability insurance commonly treats liability you assume

Many liability forms exclude liability you assume by contract and then carve back an exception for an insured contract. A federal appeals court in 2012 quoted one such policy. Its exclusion carried an exception for liability assumed in an insured contract, if the injury occurred after the contract was signed.

In that policy, an insured contract meant a business contract under which the insured agreed to “assume the tort liability of another party” for injury or damage. Tort liability meant liability “imposed by law in the absence of any contract” or agreement. The Fifth Circuit (2012) found no assumption of tort liability in the contract before it and no duty to defend. That opinion is unpublished and is not precedent under the circuit’s rule.

The wording commonly seen in liability forms follows that shape, but it is not universal, and small differences change the result. A clause that matches the insured contract definition may be treated differently from one that asks you to pay regardless of fault. Your agent can read the contract against your liability form before you sign, and an attorney can tell you what the contract itself obligates.

Real-World Scenario: A builder sends a septic installer a subcontract for a new home. The indemnity section asks the installer to defend and pay for any claim arising from the project, including claims caused by the builder’s own crews, and the insurance section asks for additional insured status. The installer sends the contract to an attorney and to the agent at the same time. The attorney flags the indemnity wording against the state’s construction statute; the agent reads the liability form’s contractual liability section and notes how the pollution policy treats assumed liability. The installer returns a marked-up contract before the excavator ever reaches the lot.

Where pollution wording meets a hold harmless clause

Pollution policies may treat contractual liability very differently from the general liability form, so the two need separate reading. A county contract insurance guide from Sonoma County says pollution policies handle contractual liability in three different ways. Some include it, some endorse it for a specific contract, and it adds: “Some exclude it with no buy-back” available.

That county also asks contractors for a waiver of subrogation in favor of its additional insureds, which is a reminder that the indemnity clause, the insurance section and the waiver usually arrive together.

For a septic business, this is where the question gets hard. The losses the trade actually has, like a backup into a home or effluent released during a pump-out, commonly run into the pollution exclusion on the liability side. How that exclusion interacts with a clause you signed is not something a web page can settle. Our general liability page and pollution liability page explain the seam, and the post on pollution exclusion exceptions a septic contractor cannot rely on goes further. Your own policy wording controls.

Homeowner tickets and builder subcontracts

A homeowner’s service agreement and a builder’s subcontract may carry very different indemnity wording, and both deserve a read. We found no primary source that addresses homeowner service agreements for pumping or repair specifically, so treat anything general here as a starting point rather than an answer.

For septic pumping and septic repair, the agreement is often a short ticket or online terms, and the indemnity language may be buried. For septic installation, the builder’s subcontract is usually longer and more deliberate. In California, the owner rule does not reach homeowners improving their own single-family dwelling, which shows how a statute can treat a homeowner differently from a developer.

A hold harmless clause is also different from a license or permit bond. Our post on septic installer bonds versus insurance explains what each one answers.

Before you sign: questions for your attorney and your agent

The useful questions split cleanly between the attorney and the agent. Ask the attorney which type of clause you are looking at, whether it reaches the other party’s negligence, whether your state’s construction statute limits it, and whether the contract counts as construction work under that statute. Who is required to buy what, and for whose benefit, is also an attorney question.

Ask the agent how your liability policy treats liability assumed by contract, whether the contract would likely fit an insured contract definition, how your pollution policy treats contractual liability, and whether the additional insured and waiver requests can be placed. The locations page lists the states we write in.

No sample clause appears in this post, because no primary source we retrieved supplies one and a borrowed template can do more harm than none. Your own policy wording controls, and your attorney controls the contract. When you want the insurance side read, start a quote and tell us what you install, what you pump and who is on the crew.