Texas Construction Anti-Indemnity Act

The Texas Construction Anti-Indemnity Act (TCAIA) is Subchapter C of Chapter 151 of the Texas Insurance Code, effective January 1, 2012. It voids broad-form indemnity provisions in construction contracts that purport to indemnify the indemnitee for its own fault, even shared or contributory fault, and renders unenforceable related additional-insured insurance procurement provisions to the same extent. The Act cannot be waived (§ 151.151). It applies only where the indemnitor is provided or procures insurance subject to Chapter 151 or Title 10 of the Insurance Code (§ 151.101), and only to projects whose original construction contract with the owner was entered into on or after January 1, 2012; related subcontracts, equipment leases, and policies follow the date of that original contract.

The core prohibition

Section 151.102 makes a provision in a construction contract, or in an agreement collateral to or affecting one, void and unenforceable to the extent it requires an indemnitor to indemnify, hold harmless, or defend a party against a claim caused by the negligence or fault, the breach or violation of a statute, ordinance, regulation, standard, or rule, or the breach of contract of the indemnitee, its agent or employee, or a third party under its control or supervision. Subject to § 151.103 and the § 151.105 exclusions, it cannot be circumvented by careful drafting (express references to negligence and conspicuous language under Ethyl Corp.).

Scope, broad definition of construction contract

The TCAIA's reach is intentionally broad. "Construction contract" means a contract, subcontract, or agreement, or a performance bond, made by an owner, architect, engineer, contractor, construction manager, subcontractor, supplier, or material or equipment lessor for the design, construction, alteration, renovation, remodeling, repair, or maintenance of, or the furnishing of material or equipment for, an improvement to real property, including moving, demolition, and excavation (§ 151.001(5)). Indemnity provisions for a single-family house, townhouse, duplex, or related land development are excluded by § 151.105(10)(A). Because the definition reaches equipment lessors and suppliers, agreements such as crane leases and service agreements for work on a facility can fall within it.

Additional-insured procurement also void

Section 151.104 extends the prohibition to additional-insured insurance procurement. A contract provision requiring the indemnitor to procure additional-insured coverage protecting the indemnitee against the indemnitee's own fault is void to the same extent as the underlying indemnity provision. This eliminates the most common workaround that pre-2012 Texas construction contracts used, extracting through additional-insured policies what could not be extracted through indemnity. Section 151.104(b) excepts a provision or endorsement in a policy issued under a consolidated insurance program only to the extent it lists, adds, or deletes named insureds.

Employee injury exception

Section 151.103 provides a critical exception: the prohibition does not apply to claims for the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier. This means indemnity provisions covering injuries to the indemnitor's own workforce remain enforceable, including for the indemnitee's own negligence. In Maxim Crane Works, L.P. v. Zurich American Ins. Co., 642 S.W.3d 551 (Tex. 2022), the Supreme Court of Texas held that "employee" in § 151.103 has its ordinary meaning, so a worker deemed a statutory co-employee of the indemnitor under the Workers' Compensation Act is not for that reason the indemnitor's employee.

Other exceptions

Section 151.105 provides that the subchapter does not affect, among other things: (1) insurance policies, including consolidated insurance program policies, except as provided by § 151.104; (2) a cause of action for breach of contract or warranty that exists independently of an indemnity obligation; (3) indemnity provisions in loan and financing documents; (4) general indemnity agreements required by sureties; (5) workers' compensation benefits and protections; (6) governmental immunity; (7) agreements subject to Chapter 127 of the Civil Practice and Remedies Code (oil, gas, and mineral agreements); (8) certain railroad license agreements; (9) copyright infringement indemnity; (10) indemnity for a single-family house, townhouse, duplex, or related land development, or a municipal public works project; and (11) joint defense agreements entered into after a claim is made.

Drafting after TCAIA

For covered contracts, indemnity outside the § 151.103 employee-injury exception is enforceable only to the extent it covers fault other than that of the indemnitee and those under its control. Clauses are often written to apply "to the extent caused by" the indemnitor or those for whom it is responsible.