12.2. PROPORTIONATE LIABILITY. Any liability of the of the Architect for breach of this agreement, or for any other cause of action arising out of the breach of this agreement, shall be limited to those damages actually caused by the Architect’s breach and shall not include any liability for damages caused by the Contractor, the Owner, or other members of the construction team.
A. Insurance
The most obvious risk-shift measure is through insurance, but the enormous cost of architects’ and engineers’ liability insurance -- and the huge deductibles that typically apply to them -- make them a very unsatisfactory method of shifting the risk from themselves. A much better method is to shift the risk from the Architect and his insurance carrier to other members of the construction team’s insurance carriers, which can be done through the use of an “additional insured” clause in the Owner/Architect Agreement and, through it, in the Owner/Contractor Agreement. A typical clause might read as follows:
12.3. ADDITIONAL INSURED. To the extent possible, the Owner will include the Architect as an additional insured on all policies of insurance on this
Project, and will require, in its contract with the Contractor, that the Contractor and its subcontractors include the Architect as an additional insured on all of the policies of insurance which they are required to maintain in effect on the Project.
Although the Supreme Court has refused to extend the express negligence doctrine to additional insured provisions, see, Getty Oil Company v. Insurance Co. of North America, 845 S.W.2d 794 (Tex. 1992), prudence would dictate that, in light of the opinion in Dresser Industries v. Page Petroleum, 853 S.W.2d 505 (Tex. 1993), the clause be conspicuous.
A. Indemnification
A much-attempted, but [at least in this author’s experience] seldom successful attempt at risk shifting in Owner/Architect contracts is the use of contractual indemnification clauses. These generally take one of two forms: (1) Indemnification from the consequences of the negligent acts of others; and (2) indemnification from the consequences of one’s own negligence. The statutory and common law limitations upon the use of the latter are considerable, although the former can and is frequently is used by some of the members of the construction team to shift risks.
1 Indemnification from the Architect’s Own Negligence
a Statutory Limitations
Some jurisdictions have statutory limitations which affect the designer’s attempt to require the Contractor to indemnify the Architect. See, e.g., Tex.Civ.Prac. & Rem.Code Ann. Section 130.002 (Vernon Supp. 1996) which states that:
A covenant or promise in, . . . a construction contract is void and unenforceable if the covenant or promise provides for a contractor . . .to indemnify or hold harmless a registered architect, registered engineer or . . . from liability for damage that: