{"id":896568,"date":"2019-10-10T10:09:38","date_gmt":"2019-10-10T16:09:38","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=896568"},"modified":"2019-10-10T10:09:41","modified_gmt":"2019-10-10T16:09:41","slug":"is-your-indemnity-agreement-enforceable","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/is-your-indemnity-agreement-enforceable\/","title":{"rendered":"Is Your Indemnity Agreement Enforceable? How to Not Miss Out on this Critical Step in Risk Management"},"content":{"rendered":"\n<p>Maura Winters | <a href=\"https:\/\/www.cozen.com\/news-resources\/publications\/2019\/is-your-indemnity-agreement-enforceable-how-to-not-miss-out-on-this-critical-step-in-risk-management\">Cozen O&#8217;Connor<\/a> | September 30, 2019<\/p>\n\n\n\n<p>\n\nGenerally, indemnity agreements in construction contracts are a promise by which one party (the indemnitor) agrees to defend, indemnify, or hold harmless the other party (the indemnitee) for acts or omissions related to the project. The enforceability of indemnity agreements is a battle that will likely ignite, if construction litigation arises. This article is intended to map out the legislative landscape of indemnity statutes across the country, as a resource to determine whether the indemnification provision in your construction contract is enforceable.&nbsp;&nbsp;As an initial matter, there are generally three forms of indemnification agreements: (1) the&nbsp;<strong>broad form<\/strong>, which includes the sole negligence of the indemnitee; (2) the<strong>&nbsp;moderate form<\/strong>, which includes all negligence, but the sole negligence of the indemnitee; and (3) the&nbsp;<strong>narrow form<\/strong>, which includes only the negligence of the indemnitor. Today, most of the states have adopted statutes that determine which type of indemnity agreements are enforceable within their jurisdiction.&nbsp;&nbsp;<\/p>\n\n\n\n<p>The following states&nbsp;<strong>do not<\/strong>&nbsp;have a statute that limits the enforceability of indemnification provisions in construction contracts, or have a provision that only applies in very limited circumstances: Alabama, Maine, Nevada, North Dakota, Pennsylvania, Vermont, Wisconsin, and Wyoming. Nonetheless, even in many of these states, courts have narrowly interpreted provisions that indemnify an indemnitee for its own negligence.&nbsp;&nbsp;For example, Pennsylvania&nbsp;<strong>does not&nbsp;<\/strong>have a general anti-indemnity statute for construction contracts but it does provide a statute that prohibits the indemnity of design professionals. 68 Pa. Stat. Ann. \u00a7 491. As noted above, Pennsylvania courts are cautious when interpreting indemnification clauses, in an effort to avoid infinite liability. In fact, for the last 100 years, the Pennsylvania Supreme Court has held, \u201cif parties intend to include within the scope of their indemnity agreement a provision that covers losses due to the indemnitee\u2019s own negligence, they must do so in clear and unequivocal language. No inference from words of general import can establish such indemnification.\u201d&nbsp;<em>Perry v. Payne<\/em>, 66 A. 553 (1907).&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">NO ANTI-INDEMNITY STATUTE<\/h2>\n\n\n\n<h2 class=\"wp-block-heading\">\u201cBROAD FORM\u201d PROHIBITIONS<\/h2>\n\n\n\n<p>The following 15 states prohibit the broadest form of indemnity agreements, for the sole negligence of the indemnitee: Alaska, Arizona, Arkansas, Georgia, Hawaii, Idaho, Indiana, Maryland, Michigan, New Jersey, South Carolina, South Dakota, Tennessee, Virginia, and West Virginia.<sup>1<\/sup>&nbsp;These states\u2019 statutes prohibit an indemnitee from requiring others to indemnify the indemnitee for its own sole negligence.&nbsp;&nbsp;Eight of these states, including Alaska, Georgia, Hawaii, Maryland, New Jersey, South Carolina, Virginia, and West Virginia, include a statutory provision that clarifies that the indemnification statute&nbsp;<strong>does not&nbsp;<\/strong>affect the validity of an agreement to procure insurance. This is called an \u201cinsurance savings clause.\u201d&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">\u201cBROAD FORM\u201d AND \u201cMODERATE FORM\u201d&nbsp; PROHIBITIONS<\/h2>\n\n\n\n<p>The following states prohibit broad and moderate forms of indemnity agreements. In these states, the indemnitor can&nbsp;<strong>only<\/strong>&nbsp;be required to indemnify the indemnitee to the extent of the indemnitor\u2019s own negligence.<sup>2<\/sup><\/p>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>Arizona<\/td><td>Iowa<\/td><td>Missouri<\/td><td>Ohio<\/td><\/tr><tr><td>California<\/td><td>Kansas<\/td><td>Montana<\/td><td>Oklahoma<\/td><\/tr><tr><td>Colorado<\/td><td>Kentucky<\/td><td>Nebraska<\/td><td>Oregon<\/td><\/tr><tr><td>Connecticut<\/td><td>Louisiana<\/td><td>New Hampshire<\/td><td>Rhode Island<\/td><\/tr><tr><td>Delaware<\/td><td>Massachusetts<\/td><td>New Mexico<\/td><td>Utah<\/td><\/tr><tr><td>Illinois<\/td><td>Mississippi<\/td><td>New York<\/td><td>Washington<\/td><\/tr><tr><td>&nbsp;<\/td><td>&nbsp;<\/td><td>North Carolina<\/td><td>&nbsp;<\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\">ADDITIONAL INSURED COVERAGE<\/h2>\n\n\n\n<p>Oftentimes, contractors operating in states that prohibit Party A from indemnifying Party B for Party B\u2019s negligence will try to circumvent the statutes by requiring Party A to name Party B as an additional insured on its insurance policy. The strategy is based on the theory that additional insured coverage is separate from indemnity, and agreements to procure insurance are not subject to statutory limitations applicable to indemnity provisions.\u00a0\u00a0Both the Insurance Services Organization\u2019s 2004 and 2013 AI endorsements extend coverage to an AI\u2019s partial (but not sole) negligence. However, the 2013 endorsement provides that additional insurance coverage will\u00a0<strong>only apply to the extent permitted by law<\/strong>. ISO CG 20 37 04 13 (\u201cthe insurance afforded to such additional insured applies to the extent permitted by law\u201d). Therefore, the success of this strategy is difficult to predict and contingent upon what type of indemnification statute the state has enacted.\u00a0Clearly, understanding the applicable indemnity statute is of great value to any risk management strategy. Depending on the jurisdiction, courts have made various rulings on this concept, so it would be best to consult the jurisprudence in your state to anticipate the exposure to liability you may face through your indemnity agreement.\u00a0\u00a0<\/p>\n\n\n\n<p><sup>1<\/sup><em>\u00a0See<\/em>\u00a0Alaska Stat. \u00a7 45.45.900; Ariz. Rev. Stat. \u00a7 32-1159 (private contracts); Ark. Code Ann. \u00a7 4-56-104 (private contracts); Ark. Code Ann. \u00a7 22-9-214 (public contracts); Ga. Code Ann. \u00a7 13-8-2; Haw. Rev. Stat. \u00a7 431:10-222; Idaho Code Ann. \u00a7 29-114; Ind. Code Ann. \u00a7 26-2-5; Md. Code Ann., Cts. &amp; Jud. Proc. \u00a7 5-401; Mich. Comp. Laws Ann. \u00a7 691.991; N.J. Stat. Ann. 2A:40A-1; S.C. Code Ann. \u00a7 32-2-10; S.D. Codified Laws \u00a7 56-3-18; Tenn. Code Ann. \u00a7 62-6-123; Va. Code Ann. \u00a7 11-4-1; W. Va. Code Ann. \u00a7 55-8-14.\u00a0<\/p>\n\n\n\n<p><sup>2<\/sup><em>See<\/em>\u00a0Ariz. Rev. Stat. \u00a7 34-226 (public contracts); Ariz. Rev. Stat. \u00a7 41-2586 (public contracts); Cal. Civ. Code \u00a7 2782.05; Colo. Rev. Stat. \u00a7 13-21-111.5 (private contracts); Colo. Rev. Stat. \u00a7 13-50.5-102 (public contracts); Conn. Gen. Stat. \u00a7 52-572k; Del. Code Ann. tit. 6, \u00a7 2704; Fla. Stat. Ann. \u00a7 725.06; 740 Ill.Comp. Stat. 35\/1-3; Kan. Stat. Ann. \u00a7 16-121; Ky. Rev. Stat. Ann. \u00a7 371.180; La. Rev. Stat. Ann. \u00a7 38:2216G (prime contractors on public projects); Mass. Gen. Laws Ann. Ch. 149, \u00a7 29C; Minn. Stat. Ann. \u00a7 337; Miss. Code Ann. \u00a7 31-5-41; Mo. Rev. Stat. \u00a7 434.100; Mont. Rev. Code Ann. \u00a7 28-2-2111; Neb. Rev. Stat. \u00a7\u00a7 25-21, 187; N.H. Rev. Stat. Ann. \u00a7\u00a7 338-A:1, 338-A:2 (design professionals); N.M. Stat. Ann. \u00a7 56-7-1; N.Y. Gen. Oblig. Law \u00a7 5-322.1; N.C. Gen. Stat. Ann. \u00a7 22B-1; Ohio Rev. Code Ann. \u00a7 2305.31; Okla. Stat. Ann. tit. 15, \u00a7 221; Or. Rev. Stat. Ann. \u00a7 30.140; R.I. Gen. Laws \u00a7 6-34-1; Tex. Ins. Code Ann. \u00a7 151; Utah Code Ann. \u00a7 13-8-1; Wash. Rev. Code Ann. \u00a7 4.24.115. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Maura Winters | Cozen O&#8217;Connor | September 30, 2019 Generally, indemnity agreements in construction contracts are a promise by which one party (the indemnitor) agrees to defend, indemnify, or hold harmless the other party (the indemnitee) for acts or omissions related to the project. The enforceability of indemnity agreements is a battle that will likely&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/is-your-indemnity-agreement-enforceable\/\">Continue reading <span class=\"screen-reader-text\">Is Your Indemnity Agreement Enforceable? How to Not Miss Out on this Critical Step in Risk Management<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,378,10279],"class_list":["post-896568","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-indemnity-agreements","tag-risk-management","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is Your Indemnity Agreement Enforceable? 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