Read this clause before you sign, not after a dispute. An indemnity clause makes you responsible for another party's losses, and a broad one covers losses you did not cause. Professional liability generally will not follow liability you assumed by contract, so this is a negotiation issue rather than an insurance one. Who this is for: Architecture firms reviewing a client agreement.
The short version
- Indemnity is a contract promise, and you can promise more than any policy will pay.
- A duty to defend obligates you to fund the client's legal fees from day one.
- A limitation of liability capping exposure at fees paid is the most valuable clause you can negotiate.
- Guarantees, warranties, and consequential damages are commonly excluded on Errors and Omissions (E&O) forms.
- Insurance requirements copied from construction contracts often cannot be met by architecture firms at all.
What you are agreeing to
An indemnity or hold harmless clause is a promise to pay for someone else's losses. It is a contract obligation, not an insurance one, which is why it is dangerous: you can promise more than any policy will cover, and the promise still binds you personally or corporately.
| Type of indemnity | What it covers | Is it insurable? |
|---|---|---|
| Limited, for your own negligence | Losses you actually caused | Yes, generally |
| Intermediate, your negligence plus shared fault | Losses you partly caused | Often, with care |
| Broad, including the other party's sole negligence | Losses you did not cause at all | Usually not, and void by statute in many states |
The four words to look for
- Defend. A promise to pay the client's legal fees, which most professional liability policies cover only in narrow circumstances.
- Warrant or guarantee. A promise that a stated fact or outcome is true. Guarantees and warranties are excluded on most errors and Omissions forms.
- Consequential damages. Lost profits and downstream losses, which many professional liability policies limit or exclude.
- Affiliates and assigns. Language extending your promise to the client's parents, affiliates, officers, and assigns, which multiplies who can come after you.
What to negotiate, in priority order
- A limitation of liability. Cap your total liability at the fees paid, or a multiple of them. This is the single most valuable clause a architecture firm can negotiate, and carriers credit it in pricing.
- Narrow the indemnity. Limit the indemnity to losses caused by your own negligent acts, errors, or omissions.
- Exclude consequential damages. Ask that neither party be liable for lost profits or indirect damages.
- Mutuality. Make the indemnity run both ways where the client's own conduct could cause a loss.
- Insurance requirements that are achievable. Insurance requirements should match what the market actually issues for architecture firms, not language copied from a construction contract.
What your policy will and will not follow
Professional liability generally covers your liability arising from a negligent professional act, whether or not a contract restates it. What it usually will not cover is liability you assumed by contract that you would not have had at law. That is why reading the clause before signature matters more than any endorsement you can buy afterwards.
Related reading: hold harmless agreements.
What this looks like in practice
Illustrative example. Numbers are typical of claims we see and are not a promise of how any specific claim would be handled.
The setup: A architecture firm that signed a client agreement with a broad indemnity and no limitation of liability.
The claim: The matter started with a dimensional conflict between the structural and architectural sets. The contractor claimed $310,000 in rework and delay.
The cost: $58,000 in defense costs and $190,000 in settlement, $248,000 in total, paid inside the policy limit after the retention.
The lesson: The professional liability policy covered the negligence claim, but the contractual promise to pay the client's legal fees went beyond what the policy owed. A capped liability clause negotiated at signature would have removed the gap.
Frequently asked questions
Q: What does a hold harmless clause commit me to?
It is a promise to cover another party's losses. Depending on the wording it can extend to losses you did not cause, and to their legal fees, which is far broader than what insurance normally pays.
Q: Will my professional liability policy cover an indemnity clause?
It covers your liability for negligent professional acts. Liability you assumed by contract that you would not have had at law is commonly excluded, so a broad indemnity can leave you personally exposed.
Q: What is a limitation of liability clause?
A clause capping your total exposure, often at the fees paid or a multiple of them. It is the most valuable protection a professional firm can negotiate and carriers frequently credit it in pricing.
Q: Should I ever agree to defend a client?
Be careful. A duty to defend means paying their legal fees from the first dollar, often before anyone has decided who was at fault. Try to limit it to indemnity for losses your negligence caused.
Q: Are broad indemnity clauses even enforceable?
Many states limit or void indemnity for the other party's sole negligence, particularly in construction related contracts. Do not rely on that. Negotiate the language instead.
Q: Who should review these clauses?
Your attorney for the legal effect, and your broker for whether the insurance requirements are achievable. Doing both before signature takes a day and prevents most contract disputes we see.
How Morrow helps architecture firms
Morrow is a licensed independent commercial insurance brokerage that specializes in architecture firms. Reviewing contract insurance and indemnity requirements is exactly the kind of question we answer every week, and because we place this coverage every day we know which carriers write it well, which forms are broad, and which contract language actually needs an endorsement behind it.
- We read the contract clause and tell you what your current policy already does and does not do.
- We market your account to carriers that have real appetite for architecture firms rather than whoever answers first.
- We issue certificates the same day a client asks, with the endorsements listed correctly.
- We stay on the file at renewal so limits, retroactive dates, and contract requirements do not quietly drift.
Get in touch and we will see how we can help. Tell us what you do, send over any contract that is driving the requirement, and send us the question and we will tell you where you stand. Start at morrowinsure.com or reach the team through the contact options on that page.
One more thing. This article is general information for architecture firms and is not legal advice, tax advice, or a statement of coverage. Policy wording controls in every case, and forms vary by carrier and by state. Have a licensed advisor review your own policy and your own contract before you rely on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated August 2026.