The 2011 Texas Legislature Tightens Indemnity Rights and Changes Mechanic's Lien Perfection Requirements

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The 82nd Regular Session of the Texas Legislature dealt with many issues related to construction projects in Texas, including sustainable design building standards for state buildings, lien waiver form requirements, and the ability to recover attorneys' fees on lien and bond claims, to name a few. However, two of the most impactful laws enacted in the 2011 session are discussed below, both of which will affect all parties involved in construction projects.

Indemnity Prohibitions for Construction Contracts (Tex. Ins. Code § 151.001, et seq.)

This law was originally drafted to provide more transparency and uniformity to consolidated insurance programs (CIP)—those that "wrap" together commercial general liability and workers' compensation coverage into one policy. However, the indemnity language added to the law in the closing days of the 2011 legislative session is seen by most practitioners as the most influential. Aside from the indemnity language, one other important aspect of the law is that all CIP policies are now required to include completed operations coverage for no less than three years. TEX. INS. CODE § 151.051.

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