Insuring Contractual Indemnity Obligations—A Lesson In Careful Contract Drafting

The Minnesota Supreme Court issued a decision last week in the case of Engineering & Construction Innovations, Inc., v. L. H. Bolduc Co., interpreting a subcontractor's agreement to indemnify a contractor, the subcontractor's contractual obligation to procure insurance to cover that indemnity agreement and the impact of the Minnesota anti-indemnification statute on such contract provisions.

Background on Anti-Indemnification Statutes

An insure-the-indemnity clause is one in which one person agrees to purchase insurance covering its obligation to indemnify another. These clauses, standard in many form construction contracts and subcontracts, became particularly significant in Minnesota after the Minnesota Legislature adopted the antiindemnification statute in 1984. That statute restricts the scope of enforceable indemnity agreements by prohibiting indemnity agreements for claims for personal injury or property damage "except to the extent that the underlying injury