The Texas anti-indemnity statute, Chapter 151 of the Insurance Code, voids any clause in a construction contract that requires one party to pay for losses caused by another party’s own negligence, fault, breach of contract, or breach of a regulation. It does not ban indemnity. It bans shifting the other side’s mistakes onto you. Effective January 1, 2012, the statute reshaped how commercial construction contracts in Texas allocate risk, and the rules it sets still govern what a valid indemnity clause looks like today.
What the Statute Voids
Section 151.102 is the operative prohibition. A provision in a construction contract that requires the indemnitor to indemnify, hold harmless, or defend the indemnitee against a claim caused by the negligence, fault, breach of contract, or breach of regulation of the indemnitee (or anyone under its control or supervision) is void and unenforceable as against public policy.1State of Texas. Texas Insurance Code 151.102 – Agreement Void and Unenforceable
The phrase to focus on is “to the extent that.” Courts do not throw out the whole clause. They strike the portion that shifts liability for the indemnitee’s own conduct and leave the rest standing. If the same clause also obligates the indemnitor to cover losses from its own negligence, that part remains enforceable. A well-drafted proportionate-fault clause survives Chapter 151 cleanly.
Before the statute took effect, broad-form indemnity was standard. A general contractor could hand a subcontractor a contract requiring the sub to pay for everything that went wrong on the job, even losses caused entirely by the GC. Smaller firms signed or lost the work. Chapter 151 ended that practice for covered contracts.
Which Contracts Are Covered
The statute defines “construction contract” broadly. It reaches any written agreement for the design, construction, alteration, repair, or maintenance of a building, structure, road, bridge, or underground utility, plus any collateral agreement that affects such a contract.2State of Texas. Texas Insurance Code 151.102 – Agreement Void and Unenforceablea> Architecture and engineering agreements tied to improving real property qualify. Every tier of the contracting chain is covered, from owner-to-general-contractor down to sub-subcontractor agreements.
Indemnity Structures That Still Work
Chapter 151 does not require you to strip indemnity from your contracts. It requires you to align the obligation with fault. Three structures remain fully enforceable:
- Proportionate-fault indemnity, where each party covers losses caused by its own negligence. Neither party pays for the other’s fault, so nothing runs afoul of Section 151.102.
- Indemnity for the indemnitor’s sole negligence, where a subcontractor agrees to cover losses that the subcontractor alone caused.
- Indemnity limited to the indemnitor’s share of concurrent fault, where blame is split and each side pays its own portion.
When reviewing a contract, the practical test is simple. Look at who ends up paying for the indemnitee’s negligence. If the answer is the indemnitor, that portion is void. If the answer is the indemnitee itself, the clause is compliant.
Exclusions Where Broad-Form Indemnity Still Applies
Section 151.105 carves out a long list of contract types the statute does not touch. Falling within an exclusion means the traditional common-law rules apply and broad-form indemnity may still be enforceable.3State of Texas. Texas Insurance Code 151.105 – Exclusions
- Contracts for single-family homes, townhouses, and duplexes, including related land development. Multi-family projects like apartment complexes are not excluded and remain subject to Chapter 151.
- Public works contracts of a municipality. Other public entities are not named in this exclusion.
- Projects covered by an owner-controlled or contractor-controlled insurance program (OCIP or CCIP), where a single policy covers everyone on site.
- Oilfield agreements governed by Chapter 127 of the Civil Practice and Remedies Code, which has its own anti-indemnity regime.
- General agreements of indemnity that sureties require as a condition of issuing construction bonds.
- Indemnity provisions in loan and financing documents, unless the contractor and the owner’s lender are both parties to the construction contract itself.
- Railroad license agreements granting access for work that does not primarily benefit the railroad.
- Indemnity for copyright infringement claims.
- Joint defense agreements entered after a claim has already been made.
Because the exclusions are numerous, confirming that Chapter 151 actually governs your contract is the first step, not an afterthought.
The Employee Injury Exception
Section 151.103 contains a narrower but important carve-out. The anti-indemnity prohibition does not apply to claims for bodily injury or death of an employee of the indemnitor, the indemnitor’s agent, or a subcontractor of the indemnitor at any tier.4State of Texas. Texas Insurance Code 151.103 – Exception for Employee Claim
This matters most in pass-through injury cases. A subcontractor’s worker is hurt on the job, collects workers’ compensation from the sub’s carrier, then sues the general contractor for negligence. The GC turns to the sub for indemnity. Under Section 151.103, the sub’s contractual obligation to indemnify the GC for that injury claim remains enforceable, even where the GC was partly at fault. The Legislature left this residual litigation risk allocable by contract because workers’ compensation already gives the injured employee a no-fault remedy.
Insurance Requirements Track the Indemnity Rules
Parties tried early on to accomplish through insurance what the statute forbids through indemnity. Section 151.104 closes that route. A contract clause requiring one party to name another as an additional insured is void and unenforceable to the extent it covers risks that Section 151.102 prohibits from being indemnified.5State of Texas. Texas Insurance Code 151.104 – Unenforceable Additional Insurance Provision
The insurance obligation tracks the indemnity obligation. If the contract cannot force you to indemnify the owner for the owner’s own negligence, it cannot force you to buy an additional insured endorsement covering that same negligence. The exclusion for consolidated insurance programs applies here as well: OCIP and CCIP policies can add, list, or remove named insureds without running into Section 151.104.5State of Texas. Texas Insurance Code 151.104 – Unenforceable Additional Insurance Provision
Check certificates of insurance and policy endorsements against these limits. Certificates that promise additional insured coverage broader than Chapter 151 allows create confusion about who is actually covered when a claim lands.
Choice-of-Law and Venue Cannot Be Used to Escape the Statute
A party that dislikes Chapter 151 cannot draft around it by choosing another state’s law. Business and Commerce Code Section 272.001 makes any provision in a construction contract for work on Texas real property voidable by the party performing the work if it subjects the contract to another state’s law, requires litigation in another state’s courts, or mandates arbitration in another state.6State of Texas. Texas Business and Commerce Code 272.001 – Certain Contract Provisions Void
The performing party can void the foreign choice-of-law or venue clause and pull the dispute into Texas courts under Texas law. If venue is voided, the default sends the case to the county where the property sits.
Fair Notice: The Common-Law Layer on Top
When a clause falls inside a statutory exception and is otherwise enforceable, it still has to satisfy the common-law fair notice doctrine before a Texas court will apply it to negligence-based claims.7Texas Court of Appeals. DDD Energy, Inc. v. Veritas DGC Land, Inc.
Two requirements apply. The express negligence doctrine demands that the contract state, in specific and clear language, that one party is being indemnified for its own negligence. General or vague indemnity language will not do the job. Second, the clause must be conspicuous: visually distinct from the surrounding text through bold type, all capitals, contrasting font, or underlining. An indemnity buried in undifferentiated boilerplate is vulnerable to challenge. Miss either requirement and the clause fails on its terms.
Reviewing a Construction Contract
The most common problem in Texas construction contracts is an outdated template with broad-form indemnity language. Those clauses are void on their face, and the party who thought it had protection finds out it never did at the worst possible moment. Ask three questions before you sign.
Does the indemnity clause require either party to cover losses caused by the other party’s negligence, fault, breach of contract, or breach of regulation? If yes, that portion is unenforceable under Section 151.102 unless an exclusion in Section 151.105 applies.1State of Texas. Texas Insurance Code 151.102 – Agreement Void and Unenforceable Does the additional insured requirement in the insurance section mirror the indemnity language? If the indemnity portion is void, the matching insurance requirement falls with it. If the clause falls inside a statutory exception, does it use express negligence language and appear in conspicuous formatting?
Proportionate-fault indemnity, drafted mutually, worded specifically about negligence, and formatted to stand out from surrounding text, is the reliable default. It protects both sides for their own fault and avoids the uncertainty of a partially voided clause.