The New Anti-Indemnity Statute: The New World for Construction and Real Estate Development

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INTRODUCTION. Contracting parties regularly negotiate for one party to be responsible for claims of specified liabilities to which the other party might be exposed. These provisions, known as indemnification provisions, cover claims ranging from breach of an agreement or harm arising out of work to be performed under an agreement to the covered party’s own negligence as well as a laundry list of other acts. Having agreed to take on such legal responsibility, an indemnitor (the party providing the indemnity protection) typically seeks to obtain insurance coverage against the risks associated with such responsibilities.

The landscape of enforcing indemnity agreements and the right to invoke corresponding insurance coverage is about to change on January 1, 2012, thanks to the Legislature’s recent enactment of Chapter 151 of the Texas Insurance Code. This Chapter limits the scope of an indemnity that may be included in certain types of contracts and also limits parties from obtaining insurance coverage for such prohibited indemnities.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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