A hold-harmless obligation is more or less an advance release, protecting the person being held harmless from being sued by the other party, even for its own wrongful actions. Here's a hypothetical example:

• Suppose “Alice” agrees to hold “Bob” harmless for any harm arising out of Event X.
• Suppose also that Event X occurs, and that Alice ends up being damaged by it.
• The hold-harmless agreement means that Alice cannot recover damages from Bob in respect of Event X, even if Bob was at fault.

HEADS-UP: Alice’s agreement to hold Bob harmless might conceivably screw up her insurance coverage in respect of Event X. Here’s how:

• Suppose that Alice’s insurance policy prohibits her from impeding the insurance carrier’s ability to sue the person(s) responsible for the covered event.
• By agreeing to hold Bob harmless, her insurance company might well take the position that she waived any insurance coverage she might have had in respect of Event X.

See generally, e.g., Timothy K. Bonnell Jr., Hold Harmless, Indemnification, and Waiver of Subrogation: What am I signing? (accessed Sept. 3, 2007).