On January 1, 2012, the new Texas Anti-Indemnity Statute (H.B. 2093) will take effect and fundamentally change indemnity law in Texas where a contracting party seeks to shift the risks of negligence and similar torts from the indemnitee to a third party. H.B. 2093 applies to “construction contracts,” entered into on and after January 1, 2012, for “construction projects.” To view the statute, click here.
Prior to H.B. 2093’s effective date, an indemnitor could agree to indemnify an indemnitee for all claims, damages or losses arising out of work performed by the indemnitor regardless of whether such damages or losses were caused by the sole, joint, concurrent, contributing or comparative negligence or fault of the indemnitee. Under H.B. 2093, contract provisions that require an indemnitor to indemnify an indemnitee against a claim caused by the indemnitee’s own negligence or that of a third party under control of the indemnitee are rendered void and unenforceable. H.B. 2093 also renders void and unenforceable any related provision requiring insurance coverage for obligations prohibited by H.B. 2093. In addition, parties may not waive the provisions of H.B. 2093 by contract or otherwise. Despite these restrictions, H.B. 2093 does permit indemnification of a party or a third party for the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier. There are also other, more limited exceptions.
H.B. 2093 has substantial implications regarding the risk of liability exposure when entering into construction contracts because it limits the scope of insurance coverage for claims arising from the negligence of the indemnitee and third parties. H.B. 2093 may even apply to contracts that are not governed by Texas law, if a later claim or accident occurs in Texas. The term “construction contract” is defined broadly, and may include contracts that parties may not ordinarily consider to be construction contracts (such as maintenance or repair agreements). Accordingly, companies doing business in Texas should rethink how they draft their indemnity and additional insured provisions in such contracts, and they should also review their own insurance programs that may cover such risks.
