What is a pay-if-paid clause in construction contracts?

A pay-if-paid clause makes the general contractor's obligation to pay the subcontractor conditional on receiving payment from the owner. If the owner doesn't pay, the subcontractor may have no legal right to collect. Pay-if-paid is void in California, New York, North Carolina, and several other states. SubShield automatically detects these clauses and tells you if they're enforceable in your state.

What is broad indemnification in construction contracts?

Broad form (Type I) indemnification requires the subcontractor to indemnify the general contractor even for the GC's own negligence. This creates unlimited liability exposure. Over 40 states have anti-indemnity statutes that void these clauses. SubShield identifies them and cites the specific statute that voids them in your state.

How does SubShield analyze construction contracts?

Upload your subcontract (PDF, Word, or paste text) and SubShield's AI analyzes it in about 60 seconds. You get a risk score (1-10), identification of 50+ risky clause types, negotiation language to propose to your GC, and state-specific legal information.

Is SubShield a substitute for a construction attorney?

No. SubShield is an AI-powered educational tool that helps subcontractors understand their contracts better. For high-value contracts ($500K+) or complex disputes, consult a licensed construction attorney. SubShield costs $47 per analysis; attorney review costs $300-500+. Use SubShield for initial screening, attorney for final review.

What states does SubShield cover?

SubShield provides analysis for all 50 US states with specific knowledge of state lien laws, anti-indemnity statutes, prompt payment act requirements, retainage caps, and pay-if-paid enforceability which varies significantly by state.

How much does SubShield cost?

SubShield offers a free trial with one full analysis per month. Single reports cost $47. Pro Monthly is $97/month for unlimited analyses. Pro Annual is $797/year for unlimited analyses. All paid plans include a 60-day money-back guarantee.

What is a no-damage-for-delay clause?

A no-damage-for-delay clause prevents the subcontractor from recovering monetary damages when the project is delayed, even if the delay was caused by the GC. The only remedy is a time extension, not compensation for increased costs. These clauses can cost subcontractors $23,000+ on average. SubShield detects these clauses automatically.

How is SubShield different from using ChatGPT to review contracts?

SubShield is purpose-built for construction subcontracts with 50+ clause type detection specific to construction, state-specific legal information for all 50 states, industry benchmarks (AIA, ConsensusDocs standards), negotiation language templates, and a GC reputation database. General AI tools lack this specialized construction knowledge.

Indemnification Clauses in Construction Contracts: A Subcontractor's Guide

Indemnification clauses can make you responsible for someone else's mistakes. Signing the wrong one could cost you everything—including things you didn't do wrong.

What is Indemnification?

Indemnification is a promise to protect someone from loss. In construction contracts, the GC typically wants you to indemnify them against claims arising from your work.

Sounds reasonable. But the devil is in the details.

Three Types of Indemnification

1. Broad Form (Type I)

You indemnify the GC for everything, including their own negligence.

Example language:

"Subcontractor shall indemnify and hold harmless Contractor from any and all claims, regardless of whether caused by the negligence of Contractor."

This is the most dangerous type. If a GC employee trips over their own feet and gets hurt, you could be liable.

2. Intermediate Form (Type II)

You indemnify the GC except for their sole negligence.

Example:

"Subcontractor shall indemnify Contractor except to the extent caused by the sole negligence of Contractor."

Better, but still risky. If you're 1% at fault and the GC is 99% at fault, you could be responsible for 100%.

3. Limited/Comparative Form (Type III)

You only indemnify for your proportionate share of fault.

Example:

"Subcontractor shall indemnify Contractor only to the extent caused by the negligent acts of Subcontractor."

This is fair. You're only responsible for what you actually caused.

Anti-Indemnity Statutes by State

Most states have banned broad form indemnification. Here are the key states:

States Banning Broad Form

Texas

California

Florida

New York

Arizona

Colorado

And 38 more states

States with No Anti-Indemnity Statute

Only a handful of states still allow broad form indemnification:

Delaware

Kentucky

Vermont

(Limited others)

What to Look For

Red Flags

"All claims, regardless of cause"

"Including the negligence of [indemnitee]"

"Sole negligence" (only protects you from GC's 100% fault)

No proportionality language

Better Language

"To the extent caused by"

"Arising out of Subcontractor's negligent acts"

"Proportionate share"

"Except to the extent caused by"

How to Negotiate

Strike broad form language - Most states won't enforce it anyway

Add proportionality - "To the extent caused by Subcontractor"

Match your insurance - Don't accept liability your insurance won't cover

Add caps - Tie maximum liability to your insurance limits

Insurance Considerations

Your CGL policy typically won't cover:

Contractual liability you voluntarily assumed

Claims arising from others' negligence

Amounts exceeding policy limits

Before signing broad indemnification, confirm your insurance covers it.

SubShield's Analysis

Our AI flags:

Broad form indemnification language

Missing proportionality

Conflicts with state anti-indemnity statutes

Insurance coverage gaps

We also provide suggested redline language to negotiate better terms.

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*Analyze your contract to catch indemnification issues before you sign.*

Indemnification Clauses in Construction Contracts: A Subcontractor's Guide

Indemnification Clauses in Construction Contracts: A Subcontractor's Guide

What is Indemnification?

Three Types of Indemnification

1. Broad Form (Type I)

2. Intermediate Form (Type II)

3. Limited/Comparative Form (Type III)

Anti-Indemnity Statutes by State

States Banning Broad Form

States with No Anti-Indemnity Statute

What to Look For

Red Flags

Better Language

How to Negotiate

Insurance Considerations

SubShield's Analysis

Ready to Protect Your Next Contract?

More Resources

Turner Construction Subcontract Analysis: What to Watch For

Lien Waivers in Construction: The Complete Guide for Subcontractors

Retainage in Construction: What Subcontractors Need to Know