The substance of construction contract indemnification provisions vary widely, and the breadth of what they require seemed to increase during the economic downturn. Accordingly, when negotiating contracts for contractor clients, keep an eye on the indemnification provisions. They are not all created equally. 

The Good
The absence of an indemnification is certainly preferred if the firm’s client is the would-be indemnitor, but the following is a good provision in the event indemnification is required.

To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the Owner, Owner’s consultants and agents, and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorney’s fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself), but only to the extent caused by the negligent acts or omissions of the Contractor, a subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Further, notwithstanding any of the above, the Contractor shall have no duty to indemnify or hold harmless any party related to design defect claims unless those claims arise from design work of the Contractor.

This provision is good for a few reasons. First, the indemnification required should run consistently with what can be insured (“provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property”). 

The provision also is more tolerable because it is written in a manner that courts and some jurisdictions such as Massachusetts interpret to require only pro rata indemnification because of the phrase, “but only to the extent caused by.”

Additionally, the provision limits that indemnification of design professionals to circumstances in which general liability coverage would apply. Namely, it excludes coverage for design professionals’ professional negligence.

Finally, the provision does not provide an express defense obligation. In many jurisdictions, the duty to defend is broader than the duty to indemnify, requiring a defense even if there ultimately is no duty to indemnify. Therefore, the lack of a duty to defend requirement is certainly beneficial.

The Not So Good
The following indemnification provision is OK because it has potential pro rata language and is tied to insurable damages.  

To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the Owner, Architect, Architect’s consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorney’s fees, arising out of or resulting from performances of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself), but only to the extent caused by the negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this section.

The problem with this provision is that it requires indemnification of design professionals, such as the architect and consultants, which also could include engineers. Because there is no limitation clause in this provision, the contractor could be required to indemnify design professionals related to their professional negligence. This indemnification provision would be better if it included express language disclaiming any obligation to indemnify for professional negligence where a contractor’s standard general liability policy does not provide any coverage for professional negligence. 

The Bad
The following provision potentially exposes the contractor to indemnification liability for design error. 

To the fullest extent permitted by Laws and Regulations, the Contractor shall indemnify, defend and hold harmless the Owner and Engineer, and the officers, directors, members, partners, employees, agents, consultants and subcontractors of each and any of them from and against all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration or other dispute resolution costs) arising out of or relating to the performance of the Work, provided that any such claim, cost, loss, or damage is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the Work itself), including the loss of use resulting therefrom, arising from, related to or caused by an act or omission of the Contractor, any Subcontractor, any Supplier, or any individual or entity directly or indirectly employed by any of them to perform any of the Work or anyone for whose acts any of them may be liable, regardless of whether caused in part by a party indemnified hereunder.

Further, the duty to defend is expressly stated, putting the contractor in the position of having to pay for the defense of the engineer out of its own pocket if its standard general liability policy does not provide such coverage. 

The Ugly
The following provision comes with all the bells and whistles a contractor should avoid. 

To the fullest extent permitted by applicable law, the Subcontractor shall indemnify, defend and hold harmless, the Owner, Contractor, and any entity/individual the Contractor is contractually obligated to defend, indemnify and hold harmless, including the Owner’s design professionals, and each of their respective agents, servants and employees, from and against all claims, damage, loss and expense, or other liability including but not limited to attorneys’ fees and costs, arising out of, caused by or resulting from performance of the Subcontractor’s Work, that of its subcontractors (and any of their lower tier subcontractors and vendors), or any of their agents, servants, or employees, regardless of whether such claim, damage, loss or expense is caused in part by a party indemnified hereunder. This provision is in addition to and does not waive, release, or alter any other indemnification right the Contractor has against the Subcontractor. The Subcontractor’s indemnification and defense obligations hereunder shall extend to claims occurring after this Agreement is terminated as well as while it is in force, and shall continue until all matters for which indemnification and defense are required are finally adjudicated. 

There is no pro rata language limiting the breadth of the indemnification, plus there is a duty to defend obligation. Further, the provision obligates the subcontractor to protect the owner’s design professionals. Finally, the indemnification obligation has no tie to what a standard general liability policy would provide coverage for (i.e, it is not tied to property damage and personal injury, but rather to “all claims, damage, loss and expense, or other liability”). Therefore, much of the indemnification obligation is uninsurable. 


Michael P. Sams is a founding member and shareholder of Boston-based Kenney & Sams, P.C. For more information, call (617) 722-6045.