Importance of Narrowly Tailoring Indemnity Provisions in Construction Contracts

Recent caselaw underscores the importance of narrowly tailoring indemnity provisions in construction contracts so they do not run afoul of Virginia Code §11-4.1. That section generally provides that an indemnity provision in a construction contract which purports “to indemnify … another party to the contract against liability for damage … caused by or resulting solely from the negligence of such other party, … is against public policy and is void and unenforceable.”

Overbroad Indemnity Provisions

In Travelers Indemnity Co. of Connecticut v. Lessard Design Inc. (E.D. Va. 2018), the court invalidated the entire indemnity provision because it potentially required the architect to indemnify the builder for the architect’s own negligence. See Allstate Ins. Co. v. Structures Design/Build LLC for another example of a court invalidating overbroad indemnity provision.

Furthering the public policy behind §11-4.1 of promoting construction safety by requiring each party to bear costs of its own negligence, the Virginia Supreme Court held that“contractual indemnification provisions that violate §11-4.1 are void in their entirety and cannot be narrowed by operation of the law.”

In short, failure to narrowly tailor an indemnity provision voids any indemnity. For example, in Uniwest v. Amtech Elevator Services, Inc., the court voided the indemnity provision for violating public policy expressed Virginia Code §11-4.1.

Statutes of Limitations

Failure of an indemnity provision to comply with Virginia Code §11-4.1 also may impact the applicable statute of limitations. For example, in Hensel Phelps Constr. Co. v. Thompson Masonry Contr., Inc., the contractor argued that its claims against subcontractors did not accrue until the date of settlement with the owner. Based on
Va. Code § 8.01-249 (5), actions for indemnification accrue when “the contributee or the indemnitee has paid or discharged the obligation.”

But because Virginia Code §11-4.1 rendered the indemnification provision unenforceable, the contractor was unable to use the accrual period for indemnity claims. Instead, the five-year statute of limitations for breach of written contracts applied to bar the contractor’s claims.

The Bottom Line

In short, an indemnity provision should not permit indemnification of the indemnitee for its own negligence. If it does, there will be no indemnity at all. There also will be no ability to use the accrual period for indemnity, which in some cases could result in a time bar.

Your Next Steps

This is a broad overview of indemnity provisions and Virginia Code. If you have questions about your particular situation, contact our Construction Law team. We can review your existing policies and help you implement policies that work for you and mitigate your risk.

If you have questions about Indemnity Provisions or other topics in construction law, contact Karen Stemland at kstemland@wrvblaw.com or (434) 220–6826.