The requirement that a hold harmless be signed by the nonprofit is increasingly common. You can protect your nonprofit by reading the language and verifying that you have not unwittingly accepted more risk than is appropriate under the circumstances. If you must assume risk, assume risk for those things over which you have control. For example, if your nonprofit is asked to sign a lease for use of a building or outdoor facility, a hold harmless agreement will be included. Ask yourself whether you are in a position to prevent or control losses covered under the agreement. A landlord may insist on a hold harmless provision but most will agree to modifications. It is acceptable to strike language or modify it on legal documents, as long as both parties sign or initial the changes.

On the other side of the issue are the agreements you should require from vendors and subcontractors. The signer agrees to hold the nonprofit harmless in the event of an accident arising from their operations. Keep in mind that a hold harmless agreement signed by someone without means to pay for damages is largely worthless. Proof of insurance or other financial resources backs up the promise to hold your organization harmless.

Additional insured endorsements are probably more important than hold harmless agreements. These endorsements are additions to an insurance policy which have the effect of adding the name of the endorsement holder to the list of insured names under the policy. An additional insured endorsement is a modification of an existing contract between the carrier and the insured person or organization. This endorsement is an excellent way to fund your hold harmless agreement.

Information provided by Alliance of Nonprofits for Insurance – Risk Retention Group. Contact Nonprofit Resources, a subsidiary of Colorado Nonprofit Association, at 303-894-0298 for additional information.