Construction Today - December 2017 - 8

LEGAL ISSUES

ON THE HOOK
Do anti-indemnity statutes always protect you? BY JEREMY P. BRUMMOND

Indemnity provisions come in all shapes and sizes. Some indemnity provisions are relatively narrow in scope with the indemnitor
agreeing to be responsible only for damages or claims to the extent
they are caused by the indemnitor's errors. Others are broader and
are often referred to as "intermediary" indemnity provisions - this is
when the indemnitor's error contributed to the damages and claims
and the indemnitor claims full responsibility even if the damages
were not entirely the indemnitor's fault. To go a step further, there
are "broad form" indemnity provisions where an indemnitor broadly
agrees to be responsible for all damages and claims relating to the
work, even if caused solely by the indemnitee.

Balancing Interests

provisions on
ยป Indemnity
construction contracts come
in all shapes and sizes.

C

onstruction contracts often include
"indemnity" provisions where the
"indemnitor" agrees to be responsible for losses incurred by the
"indemnitee" or claims asserted against the
indemnitee such as personal injury or property damage claims.

8

CONSTRUCTION-TODAY.COM DECEMBER 2017

Broad form indemnity provisions often appear in construction contracts between parties who don't have the same bargaining power,
such as big companies versus smaller companies. Recognizing the
uneven balance of power in many construction contracts, state legislatures in most states have enacted "anti-indemnity statutes," which
generally void broad form indemnity provisions and, in some states,
they void "intermediary" indemnity provisions, mandating that
both parties in a construction contract only be responsible for losses
and claims to the extent caused by those parties' errors.
Contractors and subcontractors - aware of state anti-indemnity
statutes - may enter into contracts with some feeling of comfort
that they will only be responsible for losses if somehow caused by
their errors, and they may expect that they will have no liability
or exposure to claims caused by others' errors. Contractors and
subcontractors, however, are not necessarily insulated from paying
for claims and losses resulting from others' errors, even if they are
working in a state with an anti-indemnity statute. Through the
insurance provisions in the agreement, an owner or upper-tier
contractor may be able to avoid the purpose of the anti-indemnity
statutes, and may be able to pass the financial burden of claims
and losses caused by the owner or upper-tier contractor to their
contractors and subcontractors.

The Additional Insured Loophole
In many states, it remains permissible for an owner or upper tier
contractor, in a construction agreement, to require its contractor or
subcontractor to purchase insurance covering losses or claims, even


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Table of Contents for the Digital Edition of Construction Today - December 2017

Contents
Construction Today - December 2017 - Cover1
Construction Today - December 2017 - Cover2
Construction Today - December 2017 - 1
Construction Today - December 2017 - Contents
Construction Today - December 2017 - 3
Construction Today - December 2017 - 4
Construction Today - December 2017 - 5
Construction Today - December 2017 - 6
Construction Today - December 2017 - 7
Construction Today - December 2017 - 8
Construction Today - December 2017 - 9
Construction Today - December 2017 - 10
Construction Today - December 2017 - 11
Construction Today - December 2017 - 12
Construction Today - December 2017 - 13
Construction Today - December 2017 - 14
Construction Today - December 2017 - 15
Construction Today - December 2017 - 16
Construction Today - December 2017 - 17
Construction Today - December 2017 - 18
Construction Today - December 2017 - 19
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Construction Today - December 2017 - 21
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Construction Today - December 2017 - 60
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Construction Today - December 2017 - 62
Construction Today - December 2017 - 63
Construction Today - December 2017 - 64
Construction Today - December 2017 - 65
Construction Today - December 2017 - 66
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Construction Today - December 2017 - 108
Construction Today - December 2017 - 109
Construction Today - December 2017 - 110
Construction Today - December 2017 - 111
Construction Today - December 2017 - 112
Construction Today - December 2017 - Cover3
Construction Today - December 2017 - Cover4
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