New anti-indemnity legislation will mark significant changes for the construction industry. On June 17, 2011, Texas Governor Rick Perry signed HB 2093, which makes certain indemnity provisions in construction contracts void and unenforceable if they require a person to indemnify, defend, or hold harmless another party for a claim caused by that party’s own negligence or fault. The bill also prohibits construction contract provisions requiring the purchase of additional insured coverage if the scope of such coverage would be prohibited when contained in an indemnification agreement. In practical terms, this means that owners and general contractors can no longer require subcontractors to (1) indemnify them for the owner or general contractor’s own negligence or (2) purchase insurance coverage for the owner or general contractor’s own negligence. Prior to the law’s enactment, such indemnification provisions were allowed as long as the agreement was “unambiguously stated.” XL Specialty Ins. Co. v. Kiewitt Offshore Svcs., LTD, 513 F.3d 146 (5th Cir. 2008). HB 2093 takes effect on January 1, 2012.
The bill does contain some key exceptions. Among them, parties may continue to provide indemnification against claims for “the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier.” HB 2093 also specifically excepts contracts for single family dwellings, duplexes and townhomes, and public works projects.