Section 1.50 Indemnity and Insurance Clauses

• Library: Construction Law 2016 Supp

H. (§1.50) Indemnity and Insurance Clauses

Indemnity clauses, together with contingent payment clauses, combine to be the two most serious risk-shifting clauses in construction contracts. Owners and general contractors frequently attempt to shift the risk of loss by insisting on utilization of broadly worded indemnity agreements. By signing the broad form indemnity clause, a party is agreeing to be responsible for the negligence of parties over whom it has no control. Indemnification clauses are contractual commitments used to transfer responsibility for wrongful acts from one party to another. In the construction industry, there is typically a chain starting with the owner and extending to the architect, general contractor, and subcontractor down which risks and responsibilities are shifted. See Chapter 4 of this deskbook for a thorough discussion of indemnification principles particularly as they interrelate with insurance.

In Missouri, it is legally permissible under certain conditions for one person to indemnify another person for the other person’s own negligent conduct. Formerly, the sole requirement was that the terms of the indemnification clause of the contract had to “be clear and unequivocal.” SeeWaterwiese v. KBA Constr. Managers, Inc., 820 S.W.2d 579, 584 (Mo. App. E.D. 1991); Mo. Pac. R.R. Co. v. Rental Storage & Transit Co., 524 S.W.2d 898, 908 (Mo. App. S.D. 1975); Parks v. Union Carbide Corp., 602 S.W.2d 188 (Mo. banc 1980). In 1999, Missouri became the 38^th state to regulate indemnification clauses. Effective August 28, 1999, most construction contracts, no matter how clear and unequivocal, may not provide for one party to indemnify the other party for the indemnitee’s own acts of negligence unless the contract also requires the indemnitor to obtain specified limits of insurance to insure the...