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Jan 16 Attorney Articles

2013 Changes to Indemnity Laws Shift Responsibility for Active Negligence Upstream

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Commercial ConstructionAs of January 1, 2013, an owner of a private commercial construction project can no longer enjoy the benefit of a broad, sweeping indemnity provision in its contract. Starting this year, an indemnity provision will be deemed unenforceable if it relieves the owner from liability to the extent of the owner’s “active negligence” and imposes that liability on a contractor, subcontractor or supplier. This change does not apply to construction of residential or public projects. To protect against any risks associated with an owner’s “active negligence,” it is important for the owner to obtain sufficient insurance to cover those risks which previously could be passed down to the general contractor.

In addition, any attempt by a general contractor to require a subcontractor to defend or indemnify it for claims stemming from the “active negligence or willful misconduct” of the general contractor or others is similarly void.

In light of the above, there appears to be a policy shift in California which seeks to make parties to commercial construction projects responsible for their own actions, whereas before the risks associated with a party’s own negligence could be passed downstream to the general contractor or subcontractor.