Construction Accidents Guide: Why Property Owners Get Sued

Construction accidents happen on big commercial jobs and small home remodels alike. When a worker gets hurt, the property owner is often one of the first people sued.

That surprises most owners. They hired a licensed general contractor. They never picked up a tool. So why is their name on the lawsuit?

The answer comes down to a few legal rules. It also depends on what the owner knew, what the owner did, and what the contract says.

This guide explains, in plain language, why owners get pulled into construction accident claims. It covers:

1. How workers’ compensation differs from a lawsuit against a property owner
2. Dangerous conditions an owner knew about, or should have known about
3. Problems with the building or site that existed before the project started
4. What happens when an owner starts directing the work
5. New York’s strict liability Scaffold Law
6. How owners get notified, who decides fault, and who pays
7. Hold harmless clauses, additional insured status, and joint and several liability

It ends with a checklist of steps owners can take before the first worker steps on site.

One note before starting. This guide is general information, not legal advice. Laws vary by state, so talk with a construction attorney and your insurance agent about your project.

How Often Do Construction Accidents Happen?

Construction is one of the most dangerous industries in the country. According to the U.S. Bureau of Labor Statistics, 1,034 construction workers died on the job in 2024.

Construction accounted for about one in five workplace deaths nationwide. Falls were the leading cause, at 389 deaths, or about 38 percent.

Deaths are only part of the picture. Thousands more workers suffer serious injuries every year. The most common causes include:

• Falls from ladders, scaffolds, roofs, and open holes in floors
• Being hit by falling tools, falling materials, or moving equipment
• Being caught between equipment, or buried in a trench collapse
• Electrical shock from live wires
• Tripping over debris, cords, or uneven ground

Any one of these can lead to a claim against the property owner. The next sections explain how.

Why Property Owners Get Sued After Construction Accidents

Owners get sued for two practical reasons. First, the law lets injured workers sue people other than their own employer. Second, the owner has something of lasting value: the land and the building.

The Conditions That Put an Owner at Risk

An owner is not automatically liable just because an accident happened on the property. Most claims against owners rest on one or more of these conditions:

• The owner knew about a hazard and did not fix it or warn anyone. This is called premises liability.
• A problem that existed before the project caused the injury. Examples include a rotted floor, a weak roof, or buried utility lines.
• The owner controlled how the work was done. Directing crews, methods, or safety steps moves responsibility onto the owner.
• The owner hired an unlicensed or uninsured contractor. In some states, that can make the owner responsible like an employer.
• A state law makes owners responsible regardless of fault. New York’s Scaffold Law is the best-known example.
• The owner’s contract left gaps. Weak insurance or indemnity terms leave the owner paying costs the contractor should carry.

Each of these gets its own section below.

Who Can File a Claim

Injured construction workers file most claims. They are not the only ones who can. Others include:

• Workers employed by subcontractors, suppliers, or delivery companies
• The owner’s own employees or tenants who walk through the work area
• Customers, guests, and visitors in a building that stays open during construction
• Neighbors and people walking past the site

For more on who keeps each group safe, see our guide to jobsite safety and who is responsible for what.

Workers’ Compensation vs. Third-Party Construction Accident Claims

To understand an owner’s risk, start with workers’ compensation. It is the main reason owners get sued so often.

What Workers’ Compensation Covers

Workers’ compensation (WC) is insurance employers carry for employees hurt on the job. It pays medical bills and part of the worker’s lost wages. WC also pays benefits for permanent disability or death.

It is a no-fault system. The worker does not have to prove the employer did anything wrong. Even if the worker caused the accident, benefits are usually paid.

In exchange, the worker gives up the right to sue their own employer. This trade-off is often called the exclusive remedy rule.

Workers’ compensation does not pay for everything. It does not cover:

• Pain and suffering
• Emotional distress
• Full lost wages, most states pay about two-thirds of wages, up to a weekly cap
• Loss of enjoyment of life
• Punitive damages, which are meant to punish careless conduct

For a closer look, see our guide: What Is Workers’ Compensation Insurance?

What a Third-Party Claim Is

A third-party claim is a lawsuit against someone other than the injured worker’s employer. The worker can collect workers’ compensation and file a third-party lawsuit at the same time.

Common third parties on a construction site include:

• The property owner
• The general contractor, when the injured worker works for a subcontractor
• Other subcontractors working on the site
• Equipment rental companies and equipment manufacturers
• Architects and engineers, in some cases

A third-party claim is based on negligence. Negligence means someone failed to use reasonable care, and that failure caused the injury.

Unlike workers’ compensation, the worker must prove fault. But if the worker wins, they can recover all their damages, including pain and suffering.

How the Two Compare

• Who pays: Workers’ comp is paid by the employer’s insurer. A third-party claim is paid by whoever is found at fault, usually through their insurance.
• Proof of fault: Workers’ comp requires none. A third-party claim requires proof of negligence.
• What gets paid: Workers’ comp pays medical bills and partial wages. A third-party claim can pay full wages, pain and suffering, and more.
• How much: Workers’ comp benefits follow a state schedule. Third-party settlements and verdicts have no set ceiling.

Why Workers’ Comp Pushes Claims Toward Owners

Workers’ compensation blocks the worker from suing their employer. So the worker’s attorney looks for everyone else connected to the site.

The property owner is always on that list. The owner controls the land. The owner hired the contractor. And the owner cannot move the building out of reach.

There is one more twist. The workers’ comp insurer usually has a right to be repaid from any third-party recovery. This right is called a lien.

That gives the workers’ comp insurer its own reason to support a lawsuit against the owner.

Action-Over Claims: How the Employer Gets Pulled Back In

After an owner is sued, the owner usually turns to the contractor. The owner points to the contract’s indemnity clause and asks the contractor to cover the loss.

When that contractor employed the injured worker, this is called an action-over claim. The worker sues the owner, and the owner’s claim goes back over to the employer.

The employer is never sued by its own worker. But in many states, it can still end up paying through its contract with the owner.

Indemnity clauses are covered in detail later in this guide.

Premises Liability in Construction Accidents

Premises liability is a property owner’s legal duty to keep the property reasonably safe for people allowed on it.

On a construction project, that duty does not disappear when the contractor arrives. It changes shape.

What an Owner Is Expected to Do

In most states, an owner who hires a contractor is expected to:

1. Tell the contractor about hazards the owner knows about
2. Warn about hidden dangers the contractor could not reasonably find on its own
3. Fix or block off known hazards in areas the owner still controls
4. Avoid creating new hazards, such as owner staff moving equipment through the work zone

An owner is generally not expected to run the contractor’s safety program. Once an area is turned over to a qualified contractor, day-to-day safety belongs to the contractor.

Known, Hidden, and Obvious Hazards

Courts often sort hazards into three groups. The group matters when deciding whether the owner is responsible.

• Known hazards the owner did not share. The owner knew about a weak floor or a live wire and said nothing. This is the strongest claim against an owner.
• Hidden hazards the owner should have known about. A reasonable owner would have found the problem through basic inspection or maintenance. Owners can be responsible even without actual knowledge.
• Open and obvious hazards. A trained contractor would spot the danger on sight. The owner’s responsibility is usually lower, because the contractor is expected to protect its crews.

California courts offer a clear example of this reasoning. An owner can be liable for a concealed hazard it knew about but did not disclose.

That applies when the contractor could not reasonably have found the hazard on its own.

What “Knew About” Looks Like in Practice

Owners rarely admit they knew about a hazard. Attorneys prove it with records. These records often surface in a lawsuit:

• Past maintenance work orders and repair invoices
• Earlier injury or incident reports at the property
• Emails or texts that mention the problem
• Building inspection reports, insurance inspections, and code violation notices
• Tenant complaints
• Testimony from the owner’s own staff

The lesson for owners is simple. If you know about a hazard, put it in writing to the contractor before work starts.

Real World Example: The Coated-Over Skylights

Pre-Existing Conditions and Structural Defects

Many construction accidents trace back to a problem that existed before the project started. These are called pre-existing conditions. Common examples include:

• Rotted floor framing or roof decking
• Cracked, damaged, or overloaded structural beams
• Unmarked underground utilities, buried tanks, or old foundations
• Asbestos, lead paint, mold, or contaminated soil
• Unstable slopes or poor soil
• Old wiring that is still live
• Earlier unpermitted work that was never built to code

Why Pre-Existing Conditions Create Owner Liability

The contractor controls the work. The owner controls the building and what is known about it. That split creates shared risk.

When a pre-existing defect injures a worker, four questions usually decide who is responsible:

1. Did the owner know, or should the owner have known, about the defect?
2. Could the contractor have found it with a reasonable inspection?
3. Did the contract, drawings, or reports disclose it?
4. Did the contractor’s work make the defect worse or cause the failure?

Can an Owner Shift Pre-Existing Condition Risk to the Contractor?

Partly, but not completely. An owner can shift a lot of risk through disclosure and contract terms. An owner cannot contract away a hazard it hid.

These steps help move the risk to the contractor:

• Full disclosure. Share every report you have, including surveys, soils reports, environmental studies, and past inspections.
• Pre-bid site visits. Give bidders a chance to walk the site and ask questions before they price the job.
• Verification in the scope. Make the contractor responsible for checking existing conditions before starting each area of work.
• Clear safety responsibility. State in the contract that the contractor controls site safety and the protection of its workers.
• Indemnity and insurance terms. These decide who pays first, and they are covered later in this guide.

These actions keep the risk with the owner:

• Hiding or downplaying known problems
• Holding back reports because they might raise the price
• Telling the contractor an area is safe when it is not
• Refusing to pay for testing the contractor reasonably asks for

In practice, the risk is usually shared. The owner answers for what it knew. The contractor answers for what it should have found and how it did the work.

Hidden site conditions also affect cost and schedule. Our guide to differing site conditions explains how those claims work.

When the Owner Supervises the Work: Retained Control

The fastest way for an owner to take on accident liability is to start running the job.

The general rule in most states protects owners. An owner who hires an independent contractor is not usually liable for injuries to the contractor’s workers.

The main exception is called retained control. If the owner keeps control over how the work is done, the owner can be liable for how that control is used.

What Counts as Controlling the Work

Courts look at what the owner actually did, not just what the contract says. These actions can count as control:

• Telling workers how to do their tasks, or in what order
• Choosing the ladders, scaffolding, or equipment workers use
• Setting or changing safety rules for the contractor’s crews
• Ordering workers to remove guardrails, hole covers, or barricades
• Pushing crews to work faster in ways that skip safety steps
• Directing subcontractors without going through the general contractor
• Lending the owner’s own lifts, tools, or staff to help with the work

These actions usually do not count as control on their own:

• Visiting the site and watching progress
• Reviewing schedules, invoices, and construction progress photos
• Requiring the contractor to follow safety laws and its own safety program
• Reporting an obvious danger to the contractor
• Hiring a third-party inspector to check the quality of the work

States draw this line in different places. California, for example, requires more than the right to control. The owner must actually use that control in a way that contributes to the injury.

Owners Who Act as Their Own General Contractor

Some owners skip the general contractor to save money. They hire the plumber, electrician, and framer directly and coordinate them personally.

This is sometimes called being an owner-builder. It can save the GC’s markup. It also moves the GC’s safety role onto the owner.

An owner-builder usually becomes responsible for:

• Scheduling trades so one crew does not create hazards for another
• General site safety, such as guardrails, covers over floor openings, and daily cleanup
• Checking each trade’s license and insurance before work starts
• Keeping visitors and family members out of work areas

If a trade has no workers’ compensation coverage, some states treat the owner like the injured worker’s employer. That can mean paying benefits out of pocket.

Think carefully before taking on this role. Our guide to construction project management explains what the job really involves.

How to Stay Involved Without Taking Control

Owners should stay involved in their projects. The goal is to watch the work without directing how it gets done. These habits help:

• Send all direction through the general contractor, never straight to the trades
• Put safety concerns in writing to the GC’s superintendent, who runs the site day to day
• Hire an owner’s representative who understands where the line is
• Keep owner staff, tenants, and family out of active work areas
• Leave means and methods to the contractor

“Means and methods” is an industry term for how the work gets built. It includes the tools, equipment, work sequence, and safety measures the contractor chooses.

The owner decides what gets built. The contractor decides how to build it safely.

Real World Example: The Restaurant Remodel

Strict Liability Statutes: New York’s Scaffold Law

Most construction accident claims require the injured worker to prove someone was careless. One state goes much further.

What Strict Liability Means

Strict liability means a party is responsible for an injury even if it did nothing careless. Proof of negligence is not required.

In a normal negligence case, the owner can argue it acted reasonably. Under strict liability, that argument does not work.

How New York’s Scaffold Law Works

New York Labor Law Section 240, known as the Scaffold Law, dates back to 1885. It covers gravity-related accidents on construction sites.

Gravity-related accidents fall into two main groups:

• A worker falls from a height, such as a ladder, scaffold, or roof
• A worker is hit by an object that falls or is being hoisted, such as a load of lumber

The law requires owners and contractors to provide proper safety devices for work at height. These include scaffolds, ladders, hoists, harnesses, and safety nets.

If the right device was missing or failed, the owner and GC are responsible. The worker’s own carelessness usually does not reduce the amount owed.

An owner also cannot escape by saying it hired a contractor to handle safety. The duty stays with the owner.

A related section, Labor Law Section 241(6), requires owners and contractors to follow specific state safety rules. Violations can also lead to owner liability.

The Homeowner Exemption

New York carves out one important exception. Owners of one- and two-family homes are exempt if they hire the work but do not direct or control it.

That exemption can disappear quickly. A homeowner who tells workers how to set up ladders or scaffolding can lose it.

The exemption also does not help small business owners. A shop, office, or rental building of any size is fully covered by the law.

Which States Have Strict Liability Statutes?

Today, New York is the only state with a strict liability scaffold law. Illinois had a similar law, the Structural Work Act, but repealed it in 1995.

Every other state uses a fault-based system. The injured worker must prove the owner was careless in some way.

That does not mean owners elsewhere are safe. Some states assign certain safety duties to owners by statute or court decision. Owners cannot hand those duties off to a contractor.

Ask a local construction attorney whether your state has any special owner safety rules.

What This Means for New York Owners

New York owners need to take insurance more seriously than owners anywhere else. Keep these points in mind:

• Some general liability policies exclude Scaffold Law claims. Ask your agent to confirm your policy and the GC’s policy do not.
• Insurance for New York projects costs more, and some insurers avoid the market entirely.
• Additional insured status and strong indemnity terms matter even more here. Both are covered in the final section of this guide.

How Property Owners Are Notified of a Construction Accident

Many owners assume someone will call them right away if a worker gets hurt. There is no general law that requires anyone to notify the property owner.

Notice usually arrives in one of three ways. Some owners hear about an accident within hours. Others first learn about it when a lawsuit arrives.

Notice From the General Contractor

Most well-written construction contracts require the GC to report injuries to the owner promptly, and in writing. That requirement only exists if the contract includes it.

A strong notice clause requires the GC to:

• Call or text the owner the same day as any serious injury
• Send a written incident report within 24 to 48 hours
• Include photos, witness names, and a description of what happened
• Share copies of any reports sent to OSHA or insurance companies

The employer does have a legal duty to notify OSHA, the federal workplace safety agency. A death must be reported within 8 hours.

An in-patient hospital stay, an amputation, or the loss of an eye must be reported within 24 hours. OSHA does not notify the owner.

For more on OSHA’s role, see our guide to jobsite safety.

A Letter From the Worker’s Attorney

An owner may receive a letter from an attorney representing the injured worker. It often arrives weeks or months after the accident.

These letters usually do two things:

1. Announce that the attorney represents the worker and ask for your insurance information
2. Demand that you preserve evidence, such as photos, emails, security video, and records

Take the preservation demand seriously. Deleting emails or repairing the accident area can hurt your defense later.

Do not call the attorney yourself. Send the letter to your insurance company right away.

Being Served With a Lawsuit

The formal notice is a lawsuit. A process server delivers the papers, called a summons and complaint.

The summons sets a deadline to respond, often 20 to 30 days depending on the state. Missing it can lead to a default judgment against you.

A default judgment means the court rules against you without hearing your side.

How Long After an Accident Can an Owner Be Sued?

Each state sets a deadline for filing an injury lawsuit. This deadline is called the statute of limitations.

• Most states: 2 or 3 years from the date of injury
• Shortest: Kentucky and Tennessee, at 1 year
• Longest: Maine and North Dakota, at 6 years

Attorneys often file close to the deadline. That means an owner can be sued two or three years after the project is finished.

By then, the GC may have closed its doors, and its old insurance policy may be hard to find. Keep project records at least until your state’s deadline passes.

Your Duty to Notify Your Own Insurer

Owners have their own deadline to watch. Most liability policies require you to report a possible claim “as soon as practicable.”

Waiting until a lawsuit arrives can give your insurer grounds to deny coverage. Report any serious injury on your property, even if nobody has blamed you yet.

Also notify the GC’s insurance company if you are named as an additional insured. That status is explained later in this guide.

What Owners Should Do After a Construction Accident

1. Make sure the injured person is getting medical care
2. Ask the GC for a written incident report, photos, and witness names
3. Take your own photos of the area before anything is changed
4. Save emails, texts, security video, and visitor logs from that day
5. Notify your insurance agent in writing
6. Send the GC a written request to notify its insurer and confirm your additional insured status
7. Do not sign statements, admit fault, or discuss the accident on social media
8. Talk with a construction attorney if the injury is serious

Owners who keep regular construction progress photos have a big advantage here. Those photos show how the site looked before the accident.

Why the Injured Worker’s Account Carries So Much Weight

In many construction accidents, the injured worker is the only person who saw exactly what happened. That makes the worker’s account the backbone of the case.

Where the Worker’s Story Gets Recorded

The worker’s account gets written down many times, often before any attorney is involved. It shows up in:

• The contractor’s incident report
• Emergency room and doctor records
• The workers’ compensation claim form
• OSHA’s investigation notes, if OSHA visits the site
• Texts, calls, and social media posts made after the accident
• Sworn testimony later in the lawsuit, called a deposition

How the Worker’s Account Shapes the Case

Attorneys and insurers compare every version of the story. Consistency matters a great deal.

• A consistent story strengthens the claim. If every record tells the same story, insurers tend to settle.
• A changing story weakens it. If the first report says the worker slipped on mud, later blame on a missing guardrail raises doubts.
• Details point to who is responsible. “The owner told us to move the barricade” pulls the owner in. “My foreman told us to skip the harness” points elsewhere.
• The human impact affects the value. A jury hears how the injury changed the worker’s life, family, and ability to earn a living.

That last point matters for owners. Juries tend to sympathize with an injured worker facing a business or property owner.

A worker who can no longer do physical labor may be owed decades of lost earnings. That is why construction injury verdicts can reach millions of dollars.

How Owners Can Tell Their Side

The owner’s best response to the worker’s account is good records made at the time. These carry the most weight:

• Dated photos and video of site conditions
• Written notices you sent the GC about hazards
• The GC’s daily reports and safety meeting records
• Names of other people who were on site that day
• Proof that you sent direction through the GC, not straight to the crews

Let your insurer and attorney handle contact with the worker. A friendly conversation can end up quoted in a deposition.

Who Determines Fault in a Construction Accident?

Fault in a construction accident is not decided in one step. Several groups weigh in along the way.

The Groups That Weigh In on Fault

• Insurance adjusters. Each party’s insurer investigates and forms its own opinion. Adjusters negotiate most settlements.
• Expert witnesses. Safety consultants, engineers, and doctors explain what went wrong and how badly the worker was hurt.
• OSHA. OSHA can cite and fine employers for safety violations. A citation can be used as evidence, but OSHA does not decide lawsuits.
• Mediators. A mediator is a neutral person who helps the parties reach a settlement. Mediators do not decide fault.
• Judge or jury. If the case goes to trial, the jury, or a judge without a jury, decides who is at fault.

Most construction injury cases settle before trial. The parties negotiate based on how they expect a jury would divide fault.

Your contract may also require mediation or arbitration for disputes between the owner and GC. Our guide to dispute resolution clauses explains how those work.

How Fault Is Divided

At trial, the jury usually assigns each party a percentage of fault. The percentages add up to 100.

For example, a jury might find:

• General contractor: 50 percent, for poor site supervision
• Subcontractor: 30 percent, for removing a guardrail
• Property owner: 10 percent, for not disclosing a known hazard
• Injured worker: 10 percent, for not wearing a harness

How the Worker’s Own Fault Affects the Claim

States handle the injured worker’s share of fault in three different ways:

• Contributory negligence. If the worker is even 1 percent at fault, they recover nothing. Only Alabama, Maryland, North Carolina, Virginia, and Washington, D.C. use this rule.
• Pure comparative fault. The worker’s award is reduced by their share of fault. A worker 70 percent at fault still recovers 30 percent.
• Modified comparative fault. The award is reduced by the worker’s share. But the worker recovers nothing once their fault reaches 50 or 51 percent, depending on the state.

Most states use the modified approach. New York’s Scaffold Law is the big exception, since the worker’s own fault usually does not reduce the award.

Do Owners and GCs Share Construction Accident Risk Equally?

No. There is no automatic 50-50 split between the owner and the general contractor (GC). Risk depends on three things:

1. Fault. What each party actually did or failed to do
2. The contract. Who agreed to cover whose losses
3. Insurance. Whose policy responds first, and how much coverage it holds

In most construction accidents, the GC carries the larger share. The GC controls the site, supervises the trades, and runs the safety program.

The owner’s share grows when the owner does any of these:

• Hides or ignores a known hazard
• Directs the work or overrides safety decisions
• Keeps the building occupied without coordinating with the GC
• Owns property in New York, where the Scaffold Law applies
• Hires an uninsured or underinsured contractor

Even when the owner’s fault is small, the owner may still pay a large share. That happens because of a rule called joint and several liability.

Joint and Several Liability: Why Owners Become the Deep Pockets

In plain terms, joint and several liability lets the injured person collect the full amount from any one party found at fault. It does not matter how small that party’s share was.

Think of three friends who co-sign a loan together. If two cannot pay, the bank can collect the whole debt from the third.

The party who pays can then try to collect the others’ shares. That only works if the others have money.

The opposite rule is called several liability. Under several liability, each party pays only its own percentage of fault.

How a General Contractor Runs Out of Money

A GC can be found mostly at fault and still pay only part of the judgment. That happens in several ways:

• Policy limits run out. A small GC may carry only $1 million per accident. A serious injury verdict can be several times that.
• The policy excludes the claim. Some policies exclude injuries to workers, certain types of work, or certain states.
• The policy lapsed. The GC stopped paying premiums, and nobody noticed.
• The GC goes out of business. A company with no assets and no insurance cannot pay a judgment.
• The GC files for bankruptcy. A large verdict alone can push a small contractor into bankruptcy.
• A subcontractor was uninsured. The sub’s share of fault goes unpaid.

For details on what a contractor’s liability policy covers, see our guide to CGL insurance.

Owners sometimes assume the GC’s surety bond will pay. It will not. A performance bond guarantees the work gets finished, not injury claims. Learn more in our guide to general contractor surety bonds.

Why the Property Owner Becomes the Target

Contractors come and go. Their trucks, tools, and bank accounts can disappear. The owner’s land and building cannot.

That permanent asset makes the owner the “deep pocket” in the case. Attorneys name the owner because the owner will still be there to pay.

In a joint and several liability state, the owner can pay far more than its share. An owner found 10 percent at fault can end up paying most of the verdict.

How State Rules Differ

About half the states have limited or eliminated joint and several liability. The rules fall into three broad groups:

• Full joint and several liability. Any party at fault can be made to pay the whole amount. Alabama, Delaware, North Carolina, and Rhode Island follow this rule.
• Several liability only. Each party pays only its own share. Kansas and Arizona follow this rule.
• A mix of both. Joint and several liability applies only above a fault threshold. In Texas, it applies above 50 percent. In Pennsylvania, it applies at 60 percent.

Some states also split the rule by type of damages. Medical bills and lost wages may follow one rule, and pain and suffering another.

Ask your attorney which rule your state follows. It can change your exposure by millions of dollars.

Real World Example: The $1 Million Policy Limit

Who Pays After a Construction Accident?

An injured worker can collect from several sources. The money usually flows in this order:

1. Workers’ compensation. The employer’s workers’ comp insurer pays medical bills and partial wages right away, no matter who was at fault.
2. The at-fault parties’ liability insurance. If the worker wins or settles a third-party claim, the insurers of the owner, GC, and subs pay first.
3. Umbrella or excess policies. These pay after the main liability policies run out.
4. The parties themselves. Any amount left over comes from the business or personal assets of the parties held responsible.

The workers’ comp insurer is usually repaid from the third-party recovery. That repayment comes out of the worker’s award, not on top of it.

Behind the scenes, a second fight often plays out. The owner, GC, and subs argue over which of them should pay first.

Two contract tools decide that fight: indemnification clauses and additional insured status. Owners who set them up correctly often pay nothing out of pocket.

Indemnification and Hold Harmless Clauses

An indemnification clause is a promise in the contract. The contractor agrees to cover the owner’s losses caused by the contractor’s work.

It is often called a hold harmless clause. The two terms are used almost interchangeably in construction contracts.

A typical clause asks the contractor to do three things:

1. Defend the owner by paying for the owner’s attorney
2. Indemnify the owner by paying any settlement or judgment
3. Hold harmless the owner by not suing the owner for the same loss

The duty to defend is often worth more than the duty to pay. Legal fees for a construction injury case can reach six figures before trial.

The Three Types of Indemnity Clauses

Indemnity clauses come in three strengths. The difference is how much of the owner’s own fault the contractor agrees to cover.

• Broad form. The contractor covers the owner’s losses even when the owner is 100 percent at fault. Most states do not allow this.
• Intermediate form. The contractor covers the full loss if it was even partly at fault. Many states ban this version too.
• Limited form. The contractor covers only the share of the loss caused by its own work. Every state allows this version.

Limited form clauses often include the phrase “to the extent caused by” the contractor. That wording ties the contractor’s payment to its share of fault.

Anti-Indemnity Laws

About 45 states have anti-indemnity laws for construction. These laws limit how much of the owner’s own fault a contractor can be made to cover.

If a clause goes further than state law allows, a court may throw it out. In some states, that leaves the owner with no indemnity protection at all.

This is a common mistake with contracts copied from the internet. A clause written for one state may be void in yours.

A limited form clause, drafted for your state, is the safest choice. It is enforceable everywhere.

How Indemnity Decides Who Pays First

When the owner is sued, the owner sends the lawsuit to the GC. The owner asks the GC to take over the defense. This is called tendering the claim.

With a strong indemnity clause, the GC and its insurer step in. They pay the owner’s defense costs and the owner’s share of any settlement.

The GC’s own subcontracts should include matching indemnity clauses. That lets the GC pass the loss down to the sub whose work caused it.

Why Indemnity Alone Is Not Enough

An indemnity clause is only a promise. It is only as good as the money behind it.

If the GC is bankrupt or uninsured, the promise is worth nothing. The owner is left to pay its own defense and judgment.

Indemnity disputes can also take years to resolve. The owner may pay its own attorney in the meantime and seek repayment later.

That is why owners pair indemnity with additional insured status. For more on how contract terms shift risk, see our guide to types of construction contracts.

Why Owners Need Additional Insured Status on the GC’s Policy

Additional insured status adds the owner to the GC’s commercial general liability (CGL) policy. The owner becomes a protected party on the GC’s insurance.

It is added through a policy change called an endorsement. The owner does not pay for it directly. The cost is built into the GC’s price.

Insurance is usually one of the costs the GC carries in its general conditions. That section of the budget covers job overhead.

How Additional Insured Status Protects the Owner

Additional insured status gives the owner direct rights under the GC’s policy. It does not depend on the GC’s cooperation or bank account.

Here is how it compares with indemnity:

• Indemnity is the GC’s promise to pay. Additional insured status is the insurer’s duty to pay.
• It fails if the GC goes broke. Additional insured coverage survives a GC bankruptcy, up to the policy limits.
• Indemnity often starts with an argument. Additional insured status usually means the insurer defends the owner from the start.
• Its claims can raise the owner’s own premiums. Claims handled under the GC’s policy usually stay off the owner’s insurance record.

Owners want both. Additional insured status pays first. Indemnity covers what the insurance does not.

What to Require in the Contract

Your contract should spell out exactly what the GC’s insurance must include. Ask your insurance agent to review these items:

• Coverage during construction. Standard endorsement form CG 20 10 covers the owner while work is underway.
• Coverage after completion. Form CG 20 37 covers injuries that happen after the project is finished, such as a failed railing.
• How long coverage lasts after completion. Many owners require completed work coverage for at least as long as their state’s lawsuit deadline.
• Primary and noncontributory wording. The GC’s policy pays first, before the owner’s own insurance is touched.
• Waiver of subrogation. The GC’s insurer cannot turn around and sue the owner to recover what it paid.
• Umbrella coverage. The umbrella policy should also cover the owner, not just the GC’s main policy.
• Subcontractor flow-down. Every sub must also name the owner and GC as additional insureds on its own policy.
• Notice of cancellation. The owner should be told in writing if the GC’s policy is canceled or not renewed.

In a few states, anti-indemnity laws also limit additional insured requirements. Your attorney can confirm what your state allows.

How Much Coverage to Require

Limits depend on the size and risk of the project. Common starting points look like this:

• General Liability: at least $1 million per accident and $2 million total per year
• Umbrella: $1 million to $2 million for small projects, and $5 million or more for larger or riskier work
• Workers’ Compensation: the amount required by state law, for the GC and every sub
• Commercial Auto Liability: at least $1 million, since trucks and equipment move on and off the site

Roofing, demolition, steel, and work at height carry higher risk. Ask for higher limits on those projects.

A Certificate Is Not Proof of Coverage

Most owners collect a certificate of insurance and stop there. A certificate is a one-page summary. It does not change the policy or create coverage.

A certificate may list the owner as an additional insured when no endorsement exists. If a claim arrives, the insurer follows the actual policy, not the one page certificate.

Ask the GC for copies of the actual endorsements. Check that they name you, your company, or your property.

Our guide to contractor insurance certificates explains what to look for.

Check Your Own Insurance Too

The GC’s insurance is the first line of defense. Your own insurance is the backup. Ask your agent these questions before work starts:

• Homeowners: Does my homeowners policy cover injuries to contractors’ workers? Are there limits during major renovations?
• Small businesses: Does my business liability policy cover construction on my property? Do I need to report the project?
• Umbrella: Should I add or increase my own umbrella coverage during construction?
• Owners and contractors protective policy: Should the GC buy this separate policy in my name? It covers the owner for claims arising from the GC’s work.

One common misunderstanding: builder’s risk insurance does not cover injuries. It covers damage to the building and materials during construction.

Real World Example: The Kitchen Remodel That Went Right

Construction Accident Protection Checklist for Owners

Use this checklist to reduce your risk before, during, and after your project.

Vetting the General Contractor

1. Verify the GC’s license with your state licensing board
2. Ask for the GC’s Experience Modification Rate (EMR) for the last three years. A score of 1.0 is average, and lower is better.
3. Search the GC’s name in OSHA’s online inspection database for past violations
4. Ask for a copy of the GC’s written safety program
5. Ask who the site superintendent will be and how often they will be on site
6. Ask how the GC checks its subcontractors’ insurance and safety records
7. Call references and ask specifically about safety and site cleanliness

Our guides to questions to ask a contractor and jobsite safety and EMR ratings go deeper.

Contract Terms

1. Include a limited form indemnity clause with a duty to defend, drafted for your state
2. Require the GC to pass the same indemnity terms down to every subcontractor
3. Require additional insured status for both ongoing and completed work
4. Require primary and noncontributory wording and a waiver of subrogation
5. Set minimum limits for general liability, umbrella, auto, and workers’ compensation
6. State that the GC controls site safety, means, and methods
7. Require same-day notice of serious injuries and a written report within 48 hours
8. List every known hazard and attach every report you have about the property
9. Have a construction attorney review the contract before you sign

Insurance Verification

1. Collect the certificate and the actual additional insured endorsements before work starts
2. Confirm the endorsements name you or your company correctly
3. Collect workers’ compensation certificates for the GC and every subcontractor
4. Put policy expiration dates on your calendar and ask for renewals before they lapse
5. Hold payments if the GC’s coverage lapses
6. Review your own homeowners or business policy with your agent
7. In New York, confirm no policy excludes Scaffold Law claims

During Construction

1. Send all direction through the GC, never straight to the trades
2. Report hazards to the GC’s superintendent in writing
3. Never move barricades, guardrails, or covers yourself, or ask workers to
4. Keep family, staff, tenants, and customers out of active work areas
5. Take dated photos of site conditions on every visit
6. Tell the GC in writing about any hazard you discover mid-project

If an Accident Happens

1. Make sure the injured person gets medical care
2. Get the GC’s incident report, photos, and witness names
3. Preserve emails, texts, photos, and video
4. Notify your own insurer in writing right away
5. Send any attorney letter or lawsuit to your insurer and the GC
6. Do not admit fault, sign statements, or post about it online

After the Project Ends

1. Collect proof of completed work coverage from the GC
2. Keep the contract, insurance documents, photos, and emails until your state’s lawsuit deadline passes
3. Keep the GC’s insurer and agent contact information on file