Under Construction - June 2013: Colorado’s Anti-Indemnity and Additional Insured Law

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The Colorado anti-indemnity statute significantly affects the enforceability of indemnification provisions in Colorado construction contracts.  With some limited exceptions, construction contracts imposing broad indemnity obligations—i.e., obligations requiring a party to a construction agreements to cover losses associated with another party’s own negligence—are void.

Colorado’s anti-indemnity statute does not apply to property owned or operated by railroads or public districts; nor does it apply to rental agreements.  However, for virtually all other types of construction contracts entered into after July 1, 2007, “any provision in a construction agreement that requires a person to indemnify, insure, or defend in litigation another person against liability for damage . . . caused by the negligence or fault of the indemnitee . . . is void.” 

Colorado statues do provide for allocation of liability between tortfeasors, which some trial courts will follow even in the case of a breach of contract claim.  As such, a party can be indemnified to the extent some other party was found to be the cause of a plaintiff’s damages.  But, as noted, only in very rare circumstances can a party to a construction contract be indemnified for its own negligence.

It does bear noting, however, that this statutory provision does not invalidate contract clauses that require a party to purchase insurance and to name the other party as an additional insured.  As such, given the broad restrictions on contract provisions that indemnify a party for its own negligence, it is important that parties address insurance requirements in their contracts.

Finally, parties cannot avoid Colorado’s broad anti-indemnity statute by selecting a different choice of law in their contracts. Under C.R.S. § 13-21-111.5(g), “[n]otwithstanding any contractual provision to the contrary, the laws of the state of Colorado shall apply to every construction agreement affecting improvements to real property within the state of Colorado.”

Topics:  Additional Insured, Choice-of-Law, Contract Drafting, Contract Interpretation, Indemnification

Published In: General Business Updates, Construction Updates, Insurance Updates, Personal Injury Updates

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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