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.”