In construction projects, it used to be common practice for contractors to push nearly all of the risk to the parties below them, so that subcontractors were responsible for even the upper-tier party’s mistakes. The Texas Construction Anti-Indemnity Act changed that.
If you’re unsure how this law affects your contracts or your liability on a project, a construction attorney in Houston can review your agreements and help ensure you aren’t taking on risk you shouldn’t be responsible for.
Found in Chapter 151 of the Texas Insurance Code, the law voids broad risk-shifting clauses that in Texas construction agreements.
No Indemnity for Another Party’s Own Fault
Section 151.102 of the act makes void and unenforceable any provision in a construction contract that requires one party to indemnify, hold harmless, or defend another party against a claim caused by that other party’s own negligence or misconduct
In other words, a subcontractor can no longer be forced to pay for someone else’s mistakes. Parties can still agree to indemnify another party for their own fault. The Act only blocks shifting responsibility for the other side’s negligence.
Insurance Considerations
Contractors once worked around indemnity restrictions by demanding additional-insured coverage instead. An additional-insured requirement is a contract provision that obligates one party (often a subcontractor) to add another party (often the general contractor or owner) onto its own liability insurance policy, so that the other party is covered as an insured for claims arising out of the work.
However, under Section 151.104, an additional-insured requirement is void to the same extent that it would cover the other party’s own fault. An indemnity clause and the insurance must rise and fall together.
What Projects Does the Act Cover?
The Act applies broadly to the construction, remodeling, maintenance, or repair of improvements to real property. Courts have applied it to maintenance agreements, equipment leases, and master service agreements that the parties never thought of as pure construction.
Specific examples of projects potentially covered by the act include:
- Commercial buildings (offices, retail, warehouses)
- Apartment complexes and multifamily developments
- Industrial and manufacturing facilities
- Hospitals and medical facilities
- Schools and government buildings
- Roads, bridges, and infrastructure
- Tenant improvements and commercial remodels
- Commercial roofing, HVAC, plumbing, and electrical work
- Building and grounds maintenance agreements
- Equipment and crane leases tied to a project
- Master service agreements (MSAs) for commercial property
Importantly, the Act does not cover work on a single-family house, townhouse, duplex, or directly related land development.
Exclusions and Exceptions to the Act
Under Section 151.103, the Act does not void a provision requiring an employer to indemnify another party for the bodily injury or death of their own employee, agent, or subcontractor. This preserves the common construction principle that each party should cover its own workers.
The Act also leaves several other arrangements intact, including:
- Loan and financing documents
- Surety general agreements of indemnity for bonds
- Workers’ compensation and governmental immunity protections
- Oil and gas agreements are governed by a separate statute
If your project involves these documents, an attorney can explain whether the Act still applies.
What It Means for Your Contracts
If your contracts still contain outdated indemnity language, parts of them may be unenforceable. Owners, contractors, and subcontractors should have their indemnity and insurance provisions reviewed so their contracts are actually enforceable in court.
The Houston construction law attorneys at Porter Law Firm can help you draft and enforce agreements that hold up under the Act and allocate risks where they should go. Call (713) 621-0700 to schedule a consultation.