Indemnification Clause

Indemnification Clauses Transfer Legal and Financial Liability From Landlord to Tenant

An indemnification clause requires you to 'indemnify, defend, and hold harmless' the landlord from specified claims, lawsuits, and damages. The breadth of what you're indemnifying determines your exposure. A narrow indemnification covers claims arising from your own negligence or breach of lease. A broad indemnification covers claims arising from 'any cause whatsoever in connection with the Premises' — including claims caused by the landlord's own negligence. That's a meaningful difference: if a customer slips on your wet floor, you should probably cover that. If a customer trips over a broken sidewalk the landlord was supposed to repair, you should not — but a broad indemnification clause may make you responsible anyway.

The 'Defend and Hold Harmless' Language Is Often More Expensive Than the 'Indemnify' Part

The duty to 'defend' is separate from and often more expensive than the duty to 'indemnify.' Indemnifying means you pay if you lose — you cover the landlord's damages after the fact. Defending means you pay the landlord's attorney's fees starting from day one of any lawsuit, regardless of who wins, regardless of whether the claim has merit, and regardless of whether your conduct was actually at fault. A landlord who gets sued by a visitor for a slip-and-fall on the common walkway can send the litigation bill to you if your lease requires you to 'defend' them — even before anyone has determined whose fault the walkway condition was.

Broad Indemnification Language Appears in Most Standard Commercial Leases

Standard commercial lease boilerplate often includes: 'Tenant shall indemnify, defend (using counsel reasonably acceptable to Landlord), and hold harmless Landlord and Landlord's agents, employees, officers, and directors from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorney's fees) arising from or connected with Tenant's use and occupancy of the Premises or any act or omission of Tenant or Tenant's agents, employees, contractors, or invitees.' The phrase 'any and all claims arising from or connected with Tenant's use' is extremely broad — it sweeps in claims that arise from the condition of the space, the building's systems, or the actions of the landlord's own contractors working in your space.

A Fair Indemnification Clause Is Limited to Your Own Negligence

Reasonable indemnification language limits your obligation to claims arising from your own negligence or breach of lease: 'Tenant shall indemnify and hold harmless Landlord from claims arising from Tenant's negligent acts or omissions or Tenant's breach of this Lease. Landlord shall indemnify and hold harmless Tenant from claims arising from Landlord's negligent acts or omissions or Landlord's breach of this Lease.' This mutual structure aligns liability with causation — each party is responsible for claims they caused. It eliminates the possibility that you're defending your landlord against claims they caused and that you had nothing to do with.

How to Negotiate Indemnification Provisions

Four specific asks: First, add mutual indemnification — landlord indemnifies you on the same terms you indemnify them. Second, add an exception for claims arising from the landlord's own negligence or willful misconduct — you can't be made responsible for what the landlord did. Third, change the defense obligation from 'using counsel reasonably acceptable to Landlord' to 'using counsel of Tenant's choice' — you shouldn't have to hire the landlord's preferred attorney. Fourth, add an insurance coordination provision — your indemnification obligation is limited to what's not covered by your insurance, and the landlord must first seek recovery from their own insurance before pursuing you directly.

Indemnification Interacts With Your Business Liability Insurance

If you have commercial general liability (CGL) insurance, your insurer may be obligated to defend you on indemnification claims your landlord asserts against you. But the landlord's indemnification clause may require you to indemnify claims beyond what your insurance covers, or may require you to provide a defense regardless of insurance coverage. Review your indemnification obligations alongside your insurance coverage limits and exclusions. A claim that your insurance covers at $1 million per occurrence but your lease makes you indemnify up to $5 million in consequential damages creates a gap. Tell your insurance broker about your lease indemnification clause before signing, so they can confirm your coverage is adequate.