Indiana’s Anti-Indemnity Statute for Construction and Design Professionals

By: William E. Kelley, Jr., LEED AP

Construction and design contracts almost always include some form of indemnity agreement between the parties.  The basic concept is that if a contractor or designer causes damage due to negligence or breach of its contractual or legal duties, then it can be required to indemnify the project owner for any claims and damages that might arise from that negligence or breach.  The same concept applies to prime contractors and designers in their indemnity agreements with subcontractors and consultants.  Indemnity clauses are designed to protect contracting parties by having the responsible party bear the financial risk of claims arising from their own acts, omissions, and breaches.

Sometimes, though, these indemnity clauses go beyond requiring indemnity for your own negligence or breach, and purport to require you to indemnify another party for acts, omissions, or negligence caused by the indemnified party.  Those clauses may require you to indemnify someone else for their own negligence.  Such clauses may be enforceable, but they are not without limits.

For example, Indiana’s “Anti-Indemnity Statute” is set forth in Indiana Code § 26-2-5-1, and it generally provides that an indemnity agreement for construction projects is void—as a matter of law—where it purports to require a party (the indemnitor) to indemnify another party (the indemnitee) where the claim arises from the sole negligence or willful misconduct” of the indemnitee.  Indiana Code §26-2-5-1 provides that any provision in a construction or design contract which purports to indemnify the indemnitee against liability for (1) death or bodily injury to persons; (2) injury to property; or (3) design defects; from the sole negligence or willful misconduct of the promise, is against public policy and is void and unenforceable.  In its most basic terms, you cannot be 100% at fault for a claim and seek another party to indemnify you for that claim.

The “sole negligence” concept is straightforward and easy to understand.  Where the Anti-Indemnity Statute gets a little less clear is in “nondelegable duties”.  This is a situation where the law imposes a duty upon you, and you are not permitted by law to transfer risk of that duty to another party.  You may not be 100% “at fault” or “solely negligent” for a claim, but if the claim arises under one of these “nondelegable duties”, the Anti-Indemnity Statute voids any indemnity agreement that attempts to shift that burden to another party.

This issue was explored in an unpublished opinion from the Indiana Court of Appeals in 2017 in the context of a construction site accident.  [Of note, unpublished opinions from the Court of Appeals are publicly issued, but they do not create law or binding precedent for future court cases.  They are, however, instructive as to how the Court of Appeals may approach certain legal issues and are therefore relevant for discussion purposes.]  Wilhelm Construction, Inc. v. Secura Insurance, 2017 WL 2265402 (Ind. Ct. App. 2017) involved a job site injury to the employee of a sub-subcontractor on a construction project.  A co-worker (also employed by the sub-subcontractor) was operating a lull to lift a section of scaffolding on the project site.  The injured worker was standing next to the scaffolding being lifted by the lull when the scaffolding toppled over and struck the employee.  The injured employee sued the general contractor and the subcontractor for negligence.  In turn the general contractor sought indemnity from a subcontractor and its insurer for the worker’s claim.

In its analysis, the Court of Appeals looked at the history of Indiana’s Anti-Indemnity Statute and concluded that Indiana’s General Assembly had inserted broad language “which extends application of the statute to not only the sole negligence of the promise, but also the sole negligence of promisee’s agents, servants, and independent contractors who are directly responsible to the promisee.”  The Court of Appeals then held that the sub-subcontractor was an independent contractor to the general contractor, meaning that the sub-subcontractor fell into the class of entities covered under the Anti-Indemnity Statute.  As a result, the Court of Appeals held that the Anti-Indemnity Statute rendered the indemnity clauses void, since the statute disallowed indemnity for both the sole negligence of the promisee and the sole negligence of the promisee’s independent contractors.  Thus, neither the sub-subcontractor nor its insurance company owed indemnity to the general contractor.

After the Wilhelm decision, legislative efforts were made through the Indiana General Assembly to amend the Anti-Indemnity Statute.  House Bill 1015 proposed to amend Indiana Code § 26-2-5-1 by stating that “Sole negligence does not include vicarious liability, imputed negligence, or assumption of nondelegable duty.”  This proposed language would address situations similar to Wilhelm, where the party seeking indemnity may have a “nondelegable duty” but was not 100% at fault for the claim.  House Bill 1015 also proposed new provisions that would specifically address limitations on defense and indemnity obligations by design professionals, which limitations did not previously exist in the Anti-Indemnity Statute.

House Bill 1015 ultimately failed to pass, and thus Indiana’s Anti-Indemnity Statute remains unchanged.  What will become of this law—both in the courts and in legislative efforts—remains to be seen.  However, parties dealing with potential indemnity claims on construction and design projects need to be mindful of these recent developments as to the Anti-Indemnity Statute to protect contractually-bargained-for indemnity, on the one hand, and prevent overly broad applications of indemnity demands in the face of nondelegable duties, on the other hand.


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