The Texas Anti-Indemnity Statute

Texas’ legal landscape concerning insurance law and litigation was changed substantially by the Texas Anti-Indemnity Statute (Texas Insurance Code § 151.102), which took effect in January of 2012 following the passing of HB 2093. The law has a significant impact on Texas cases by limiting and prohibiting certain agreements to shift liability risks for negligence and similar torts from the indemnitee to a third party, and especially so as they relate to construction.

Given the implications involving the Texas Anti-Indemnity Statute as they relate to liability exposure, construction law, involving indemnity agreements in Texas and additional insured provisions, and evolving case law, companies that do business in Texas have been forced to rethink how they draft commercial and residential construction contracts, manage risks, and engage in litigation, and increasingly rely on experienced attorneys.

At Hendershot Cowart P.C., we serve businesses and construction companies throughout Texas in matters involving insurance law, indemnity, and the Texas-Anti Indemnity Act. Call (713) 909-7323 or contact us online to speak personally with a member of our team.

Texas Insurance Code § 151.102 and Indemnity in Texas

Indemnity clauses are contractual provisions that commit one party to compensate the other for losses arising out of a commercial contract. While they can be used by businesses in various industries, they are central parts of many construction contracts because they allow parties such as a contractor to control liability risks when another party, such as a subcontractor, assumes liability.

Prior to the Texas Anti-Indemnity Act, parties in a construction contract (indemnitor) had the ability to agree to indemnify another party (indemnitee) for all claims, losses, or damages arising from work the indemnitor performed, regardless of which party was at fault, and regardless of whether the indemnitee was at least partly at fault. However, the Act changed that through statutory restrictions and prohibition.

Two businessmen in the construction industry agree to a contract with an anti-indemnity provision. A hard hat and level sit in the foreground.

Here are a few key points about the Texas Anti-Indemnity Act and its impact on construction contracts and insurance:

  • Under the Act, construction contracts for indemnification of certain types of broad form indemnity obligations are prohibited (void and unenforceable). In other words, construction contracts can no longer contain clauses requiring a party to indemnify, defense, or hold harmless another party for claims arising from their own negligence, whether in whole or in part.
  • The Act also prohibits any related provision requiring insurance coverage for prohibited obligations, meaning indemnitors can’t be required to purchase additional coverage if such coverage would be prohibited as a result of the underlying indemnification agreement.
  • Parties cannot waive provisions of the Act by contract or otherwise.

The Anti-Indemnity Act has had a marked impact on insurance policies, as it voids additional coverage in some cases. This is especially true among construction companies and related businesses which may purchase additional insurance coverage for other parties to work around anti-indemnity clauses. It also renders any indemnification provision void if it requires a party to indemnify another for claims arising from the indemnitee’s fault.

Anti-Indemnification Statute Exceptions

Despite the restrictions created by the Anti-Indemnity Act, the law does provide for some exceptions. By statute, this includes eleven specific circumstances where the prohibition does not apply. Examples include:

  • Indemnification of a party or third party for the death or bodily injury of an indemnitor’s employee, or that of its agent or subcontractor (“action over claims”).
  • Public works projects
  • Residential construction contracts

Frequently Asked Questions

What is an Anti-indemnity Clause?

An anti-indemnity clause is a provision in a construction contract that defines who is legally liable for losses caused by a construction accident. These clauses can include damages such as the cost of litigation and attorney’s fees. The Texas Anti-Indemnity Act delineates certain prohibitions and restrictions for these types of clauses.

Are Indemnity Clauses Enforceable?

Yes, indemnity provisions are typically enforceable. Generally speaking, these provisions should be inclusive enough that they address the concerns of each party, but reasonable enough that enforceability is not challenged.

What is Broad Form Indemnity?

Broad form indemnity provides blanket protection for the indemnitee in a construction contract, making them free of liability regardless of whose negligence causes the damages. Certain types of broad form indemnity are void under the Texas Anti-Indemnity Act.

Experienced Texas Insurance Litigation Attorneys on Your Side

Our insurance law and litigation team can assist clients with evaluating cases involving the Anti-Indemnity Act and provide the experienced representation they need. This includes proactive representation for drafting, negotiating, and structuring construction contracts to address statutory restrictions and exceptions and maximize the indemnification without risking violations.

It also includes protecting the rights and interests of clients when disputes arise – whether it be enforcing or defending against a claim. Our firm has particular experience in addressing such matters as they relate to construction, and is equipped with the experience to assist in matters involving construction contracts, indemnification, construction arbitration, litigation, and more.

At Hendershot Cowart P.C., our breadth of experience in matters involving Texas insurance statutes, insurance law, business contracts, construction law, and litigation uniquely prepare us to tackle even the toughest of issues on a proactive and responsive basis.

If you have questions about the Texas Anti-Indemnity Act or Texas contract law statutes and how they may be implicated in your potential case, please call (713) 909-7323 or contact us online to speak personally with an attorney.

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