Volume 39, Issue 10, Ocober 2004

ContractGlazing

Oregon Appeals Court Voids Requirements for Additional Insureds

An Oregon appeals court has voided an additional insured requirement in the case Walsh Construction Co. v. Mutual of Enumclaw because it purported to make a subcontractor and its insurer accountable for a general contractorís alleged mistake that caused injury to a worker. 

The case involves the application of Oregonís anti-indemnity statute to an additional insured requirement in a subcontract agreement. The law says that ďany provision in a construction agreement that requires a person or that personís surety or insurer to indemnify another against liability for damage arising out of death or bodily injury to persons or damage to property caused in whole or in part by the negligence of the indemnity is void.Ē The statue allows for the use of limited indemnity agreements, but an appeals court found that the exception does not apply to this case. 

Thirty-six states have some form of anti-indemnity legislation designed to prevent contractors from requiring their subcontractors to indemnify them against liability for accidents caused by the contractorsí negligence. Nearly all of that legislation provides a loophole for insurance requirements that accomplished the same end. However, Oregonís law was amended so that neither the subcontractor nor its insurer may be required to indemnify another contractor, unless the negligence of the subcontractor caused the underlying loss. 


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