By Jenny Holly Hansen | WBN News | June 3, 2025

In the world of business insurance and commercial leases, two clauses appear regularly: Hold Harmless and Waiver of Subrogation. While both are common, they carry important legal and financial consequences that every business owner should fully understand. These clauses are often presented as “standard” contract language, but they deserve careful review before signing.

A Hold Harmless Clause—also called an indemnification clause—transfers certain liabilities from one party (typically the landlord, property manager, or contracting party) to the other (in many cases, the business owner or tenant). In simple terms, you are agreeing to take responsibility for certain losses, sometimes even those you didn’t directly cause.

For example, if a customer slips and falls in a common area of a shopping plaza, the landlord may require you to hold them harmless. That means your business may have to defend the claim and cover the damages, even though you don’t control the common area.

From the landlord’s perspective, this limits their exposure. For you, the business owner, it often means taking on more risk than anticipated. Some hold harmless clauses are narrowly written, while others may be broad enough to cover situations that are outside your reasonable control. This is why legal review is always advised.

Waiver of Subrogation: Giving Up Recovery Rights

A Waiver of Subrogation Clause limits your insurance company's ability to recover losses from a third party who may have caused or contributed to a claim. In practice, this means:

  • If your insurance company pays out a claim, they waive their right to pursue reimbursement from the responsible third party (e.g. the landlord).
  • Your loss experience reflects the full claim amount, even if someone else was at fault.
  • Over time, this can affect your claims history and potentially your insurance premiums.

Essentially, a waiver of subrogation shields the other party from being held financially accountable, even if their negligence played a role in the loss.

Why Are These Clauses So Common?

The reality is that landlords, lenders, and larger contracting parties often have more negotiating leverage and routinely include these clauses in standard leases and service agreements. In competitive real estate or service markets, tenants and small businesses may feel they have limited room to negotiate.

Why They Require Careful Consideration

From an insurance and risk management standpoint, both clauses reduce your legal protections and may expose your business to additional financial obligations:

  • You may be assuming liability for risks outside your control.
  • You may be limiting your insurer’s ability to recover funds, affecting your long-term claims experience.
  • Over time, these risks can impact your premiums, your financial exposure, and even your ability to secure future coverage.

This is why these clauses are not automatically recommended without careful review and full understanding of the risks involved.

Sometimes They’re Unavoidable — But You Have Options

In many cases, these clauses are non-negotiable. However, that doesn’t mean you’re powerless. You can:

  • Review the language carefully and negotiate narrower terms where possible.
  • Consult both your insurance broker and legal counsel before signing.
  • Ensure your insurance policy is structured to handle any additional exposures these clauses create.

My Role as Your Insurance Broker

One of the most important roles I play as a broker is helping my clients navigate these types of contractual risks. While I may not be able to eliminate every clause, I can help you fully understand what you’re agreeing to, make sure your policy responds appropriately, and ensure you’re making an informed decision that balances opportunity with protection.

These clauses may be common—but they should never be signed blindly.

Let’s Keep Talking:

Jenny is a business insurance broker with Waypoint Insurance. With 19 years experience, she will well versed in the technical aspects of business coverages.

She can be reached at 604-317-6755 or jholly-hansen@wbnn.news. Connect with Jenny on LinkedIn at https://www.linkedin.com/in/jenny-holly-hansen-365b691b/.  Connect with Jenny at BlueSky: https://bsky.app/profile/jennyhollyhansen.bsky.social

Let’s Meet Up:

Jenny Holly Hansen is a cohost with Chris Sturges of the Langley Impact Networking Group. You are welcome to join us on Thursday’s from 4pm to 6pm at: Sidebar Bar and Grill: 100b - 20018 83A Avenue, Langley, BC V2Y 3R4

TAGS:  #Jenny Holly Hansen #Protect Your Business #Hold Harmless Clause #Waiver of Subrogation

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