Indemnity and Hold Harmless Agreements in New York Construction: What GOL 5-322.1 Allows and How to Insure It
Every New York subcontract has one: the clause where you agree to defend, indemnify and hold harmless the owner and GC. Whether that clause is enforceable, and whether your insurance stands behind it, decides who pays for a Labor Law claim. Here is what New York law allows, what it voids, and what to check before you sign.
New York General Obligations Law §5-322.1 makes void any construction-contract clause that requires a subcontractor to indemnify the owner or GC for injury or damage caused by the owner's or GC's own negligence, in whole or in part. The Court of Appeals held in Brooks v Judlau Contracting (2008) that a clause limited "to the fullest extent permitted by law" is still enforceable for the share of the loss not caused by the indemnitee's negligence. Separately, a promise to buy insurance naming the GC as additional insured is not an indemnity agreement and is not barred by the statute. The indemnity you sign is covered by your general liability policy only if contractual liability is intact, so check it before the next job. See our NY Labor Law insurance page.
This guide is part of our New York Labor Law series. It explains the contract side of the action over: why the GC comes back at you after a jobsite injury, and what New York law lets that clause do.
This is general information, not legal advice. Have a New York construction attorney review your contracts.
What the statute says
Section 5-322.1 applies to agreements relating to the construction, alteration, repair or maintenance of a building, structure, appurtenances and appliances, including moving, demolition and excavation. Any provision in those agreements that purports to indemnify or hold harmless the promisee (the owner or GC) against liability for bodily injury or property damage caused by or resulting from the promisee's own negligence, or that of its agents or employees, whether the negligence is in whole or in part, is against public policy and void.
The statute does not affect the validity of insurance contracts or workers' compensation agreements.
Three cases every contractor should know
| Case | What the Court of Appeals held | Why it matters to you |
|---|---|---|
| Kinney v G.W. Lisk Co. (1990) | An agreement to procure insurance for another party is not an indemnity agreement and is not barred by §5-322.1 | Additional-insured requirements are enforceable even where the indemnity clause is not. That is why GCs rely on them. |
| Itri Brick & Concrete Corp. v Aetna (1997) | A clause that requires full indemnity for the GC's own negligence is unenforceable where the GC was partly negligent | Broad "any and all claims" language with no limiting phrase can fail entirely |
| Brooks v Judlau Contracting (2008) | A clause limited "to the fullest extent permitted by law" allows partial indemnification for the share of liability not caused by the GC's negligence | Most modern subcontracts use this phrase, so expect the clause to be enforced for your share |
How this plays out in a Labor Law claim
Under Labor Law 240 and 241(6), the owner and GC can be liable without being negligent themselves; their liability is statutory and vicarious. When that is the case, §5-322.1 does not stand in the way: there is no negligence of theirs to carve out, so a valid clause can shift the whole loss to the subcontractor whose work caused it.
When the GC was also negligent (for example, it controlled the site and ignored a hazard), the clause is enforceable only for the share of fault that is not the GC's, and only if it contains limiting language such as "to the fullest extent permitted by law".
Your indemnity clause is also what opens the door against you as an employer. Workers' Compensation Law §11 bars third-party claims against an employer for injuries to its own employee unless there is a grave injury or a written indemnity contract signed before the accident. Your subcontract is that contract. See grave injury and WCL §11.
The insurance side: what makes your indemnity covered
A valid indemnity clause is only as good as the insurance behind it. On the standard general liability form, the obligation you take on is covered as contractual liability through the definition of insured contract, specifically the paragraph covering tort liability you assume under a business contract.
- CG 21 39 (Contractual Liability Limitation) removes that paragraph. With it, your indemnity promise has no coverage behind it.
- Action-over and contractors' employees exclusions can block the same claim from another direction.
- Defense costs: check whether the policy pays the indemnitee's defense in addition to limits; on the standard form this depends on conditions being met.
We explain how to find these in your own policy in the action-over exclusion guide.
The insurance requirements that come with the clause
Because indemnity can fail but insurance-procurement promises are enforceable, New York subcontracts pair the clause with insurance requirements. Expect most of these:
| Requirement | What it usually means |
|---|---|
| Additional insured, ongoing operations | CG 20 10 or equivalent naming the owner, GC and others listed in the contract |
| Additional insured, completed operations | CG 20 37 or equivalent, often for a set number of years after completion |
| Primary and non-contributory | Your policy pays before the GC's own policy (often CG 20 01) |
| Waiver of subrogation | Your carrier gives up recovery against the GC (CG 24 04) |
| Per-project aggregate | Your aggregate limit applies separately to each project (CG 25 03) |
| Umbrella or excess | A stated limit that follows form and includes the additional insureds |
Failing to procure the required insurance is its own breach. If your policy does not provide what the subcontract required, the GC can sue you for breach of the insurance-procurement clause, separately from the indemnity. Read the insurance exhibit before you sign and send it to your broker before the job starts. A certificate (ACORD 25) does not prove any of it; the endorsements do.
Checklist before you sign a New York subcontract
- Read the indemnity clause for "to the fullest extent permitted by law" or similar limiting language, and for who is indemnified
- Check the scope: "arising out of your work" is narrower than "arising out of the project"
- Send the insurance exhibit to your broker before signing; ask whether every required form is on your policy
- Confirm contractual liability is intact: no CG 21 39, no action-over exclusion
- Push the same terms down to your own subs, and collect their endorsements, not just certificates
For the coverage itself, see NY Labor Law insurance; for pricing, see contractor insurance cost in New York.
Fastest way to a quote: email your current policy (dec page and all endorsements), payroll by class code and 5 years of loss runs to adolfo@nextguardinsurance.com. One complete submission moves faster than ten phone calls.
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Frequently Asked Questions
Are hold harmless agreements enforceable in New York construction?
Yes, within limits. General Obligations Law §5-322.1 voids any construction-contract clause that would indemnify the owner or general contractor for its own negligence. A clause limited to the fullest extent permitted by law is enforceable for the share of the loss not caused by the indemnitee's negligence, and a clause can shift the full loss when the owner's or GC's liability is purely statutory, as it often is under Labor Law 240.
What does 'to the fullest extent permitted by law' mean in an indemnity clause?
It limits the indemnity to what New York law allows. In Brooks v Judlau Contracting (2008), the Court of Appeals held that this language permits partial indemnification: the subcontractor indemnifies the general contractor for the share of liability that was not caused by the general contractor's own negligence.
Can a general contractor require me to name it as additional insured?
Yes. In Kinney v G.W. Lisk Co. (1990), the Court of Appeals held that an agreement to procure insurance is not an indemnity agreement, so it is not barred by GOL §5-322.1. If you fail to obtain the insurance the contract requires, the general contractor can sue you for breach of contract.
Does my general liability policy cover the indemnity I sign?
Usually yes, as contractual liability through the policy's definition of insured contract, unless the policy has been changed by endorsement. CG 21 39 (Contractual Liability Limitation) removes that coverage, and action-over or contractors' employees exclusions can block the same claim. Only the policy forms show this; the certificate does not.
Does signing an indemnity clause affect my workers' comp protection?
Yes. Workers' Compensation Law §11 protects employers from third-party claims for injuries to their own employees unless there is a grave injury or a written indemnity or contribution agreement signed before the accident. Your subcontract's indemnity clause is that agreement, so the GC can bring an action-over claim against you whatever the injury.
Should I have a lawyer review my subcontract?
Yes. This guide is general information, not legal advice. A New York construction attorney should review the indemnity and insurance provisions, and your broker should confirm that your policies meet the insurance requirements before you sign.
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