Indemnification In Construction Contracts – Construction & Planning

I think a lot of contractors are afraid of indemnification
provisions because they do not know what they mean and how they are
supposed to work. The general idea behind indemnification in construction contracts is that you are
responsible for any damage you cause and any injuries to your
subcontractors or employees. This basic idea makes sense and is the
reason you have insurance and worker compensation.

Let me give you a couple of examples of what indemnity looks
like. I once represented a painting contractor who had to indemnify
a general contractor from the claims of a person who had parked
their car on the street while they were painting the exterior of a
house and accidentally got overspray on the person’s car.

This was a situation where it was clear that my client caused
damage that they were responsible for. My client chose to pay the
person in cash instead of filing a claim on their insurance.

In another situation, my client was installing light fixtures
inside a house when they accidentally hit the fire sprinkler system
and flooded the house. This was clearly damage caused by my client
that they were responsible for taking care of, they filed a construction claim on their insurance to pay
for the damages.

When is Indemnification Unreasonable?

The basic idea behind a construction contract indemnification
clause is completely reasonable, If you cause damage or one of your
workers gets hurt, you are responsible.

Where this reasonable idea has been stretched to something
completely unreasonable in construction contracts is when the
indemnification clause tries to make you responsible for damages
caused by an owner or a general contractor.

When The General Contractor is At Fault in Indemnity

For example, you are a stucco subcontractor, and the general
contractor agrees to provide the scaffolding. At some point during
the project, the scaffolding fails and some of your subcontractors
are hurt. Anything resulting from this incident should be the
general contractor’s responsibility. If you signed an
indemnification provision that says you are responsible for the
acts or negligence of the general contractor, you will be
responsible for this, which may not be covered by your
insurance.

What a Fair Provision Looks Like in a Construction
Contract

The subcontractor shall indemnify and hold harmless
the Owner and general contractor for all damages, losses, or claims
that arise as a result, in whole or in part, from the negligence,
error, omissions, or failure to perform by the subcontractor, his
employees, or his agents.

Now I know in general indemnity clauses in subcontracts are more
intense than what is listed above, but the main thing to look out
for is the indemnification of other people. You should try to
remove anything that makes you responsible for the actions,
inactions, negligence, or intentional actions of the owner or the
general contractor.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.