§ 130.003.Insurance Contract; Workers' Compensation

Two exclusions, and both are necessary for the chapter to work sensibly.

This chapter does not apply to an insurance contract or a workers’ compensation agreement.

The insurance exclusion is essential. An insurance policy is in substance a promise to indemnify another party against liability — which is exactly what the chapter voids in construction contracts. Without the exclusion, the chapter would read as prohibiting construction insurance.

That would be absurd, and it would defeat the chapter’s own scheme, which expressly contemplates a design professional naming an owner as an additional insured as the permitted alternative to a defence obligation.

So insurance is the mechanism the chapter channels risk into. Where a contractual indemnity is void, insurance remains available to allocate the same risk — priced, regulated, and backed by a solvent carrier rather than by whichever party had less bargaining power.

The workers’ compensation exclusion serves a different purpose. Those agreements involve indemnity and subrogation arrangements between employers, carriers and statutory funds, all governed by the Labor Code’s own comprehensive scheme.

Applying an anti-indemnity rule drawn for construction contracts to that scheme would create conflicts without addressing any bargaining problem, since workers’ compensation terms are largely statutory rather than negotiated.

Neither exclusion depends on the parties. An insurance contract between construction parties is still an insurance contract, and outside the chapter.