Indemnity Legislation - HB 2093

Cox Smith Indemnity and Insurance E-Alert

Indemnity Legislation - HB 2093

Recently, on June 17, 2011, Governor Perry signed into law HB 2093 concerning indemnities and additional insured coverage on construction projects in Texas. The legislation was a culmination of several years of attempts to pass anti-indemnity law pertaining to construction contracts. The legislation as passed was a compromise resulting from mediated negotiations involving interested trade groups, including The Associated General Contractors of America (AGC), Associated Builders and Contractors (ABC) and Texas Civil Justice League.

The legislation essentially prohibits and voids upstream broad form and intermediate form indemnity and additional insured coverage to owners and contractors on construction projects in Texas for claims involving the sole or concurrent negligence of the indemnitees. However, the legislation does not apply to on-site injury or death claims by employees of indemnifying contractors or subcontractors against indemnitee owners or contractors. Such claims constitute a large portion of the claims usually covered by such indemnification and additional insured provisions in construction contracts.

The legislation also does not apply to residential or public works construction projects, nor does it apply to named insured status under OCIP or CCIP insurance policies, indemnities in loan agreements, copyright infringement indemnities or joint defense agreements entered into after a claim is made. Nonetheless, the legislation will have an impact on indemnity and additional insured provisions in construction contracts, and additional insured endorsements, for owners and contractors.

The legislation will govern construction contracts and consolidated insurance programs established on or after January 1, 2012. It will be necessary for owners and contractors to evaluate and revise their construction contracts and insurance programs as impacted by this legislation.

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This notice was authored by Shareholder Brett Schouest who is part of the Insurance Section in Cox Smith’s Litigation / Arbitration Practice Group.