Professional Indemnity FAQ

Hold Harmless Agreements and your Professional Indemnity

What is a "Hold Harmless" agreement and could this affect my professional indemnity insurance?

We often come across indemnity clauses in contracts which require one contracting party to “hold harmless” the other contracting party.

There are also judicial statements to the effect that an indemnity is a contract by one party to keep the other harmless against loss. So, is there a difference between an indemnity clause and a hold harmless clause? More particularly, what are their insurance implications from a company’s financial liability standpoint?

Essentially, a “hold harmless” clause gives the recipient of that clause (“the recipient”) the benefit of being “held harmless” - or “not be legally bothered” - by the other contracting party or any other party claiming against the recipient. A hold harmless clause is a risk transfer mechanism. In fact, the expression “hold harmless” is derived from the Latin word indemnis which means “not harmed”. The “hold harmless” obligation requires the grantor of that benefit to hold harmless the recipient from risks of potential loss as well as actual loss.

An example of a hold harmless clause is: “The contractor holds the principal harmless from any action, claims, liability or loss in respect of the performance of the services.” Under this hold harmless clause, the contractor is not only prevented from bringing any claim against the principal (even if the principal has contributed to the loss or liability in the first place),

This can have implications for Professional Indemnity Insurance, particularly if the insurers wish to subrogate against a party for a recovery after paying out a large claim for another party it turns out is actually liable. If this other party has a "hold harmless" agreement then insurers cannot do so. Unless disclosed and agreed to, Insurers may decline the original claim. Be careful with any "hold harmless agreement.

Latest News

CPR joins Ausure

We would like to announce to all our Clients, Prospective Clients, Suppliers and Insurers, that Cooper Professional Risks Pty Ltd trading as CPR Insurance Services, will be leaving National Adviser Services Pty Ltd (NAS) and joining Ausure Pty Ltd as a Corporate Authorised Representative from 5 March 2018.

Fundamentally, there is no difference to you, except our Invoices will look a little different, and the Banking details will be in a different name and account number. Everything else at CPR stays the same.

There are a number of reasons we have made this decision, but the primary reason is for what we believe is best for our clients.

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Special offer to CPR Insurance clients

Employsure are providing a FREE Business Health Check to all our clients and gives you the opportunity to receive an analysis of the health and safety requirements in your workplace. Also. Employsure  will review your employment agreements as well as your wage rates helping you to avoid workplace claims.

Ordinarily this would cost you at least $1,250 but because you are a CPR Insurance client, it is free!

It involves the following review for you.

SAFECHECK

A specialist Work Health and Safety Consultant will visit your workplace and carry out:

A review of your business’ current work health and safety policies, procedures and systems to identify areas of concern or non-compliance

Following the review, you will receive a report summarising the findings and the health and safety

Status of your workplace

WAGE CHECK

A Wages Adviser will review your rates of pay and produce a Wage Check report.

The review will be conducted against the industrial instrument applicable

A report will be supplied advising if the wages are compliant and what steps to take to achieve compliance

CONTRACT REVIEW

A Document Consultant will review an employment agreement and provide recommendations.

The review will highlight compliance issues with the Fair Work Act 2009 as well as best practice

The report will make recommendations to achieve compliance and provide protection to your business.

This will remove any areas of potential dispute and risk

So what do you have to lose? Contact us on 07 3123 1137 and arrange 

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