A fire damaged an apartment complex under construction in Texas. The owner sued the general contractor and subcontractors for negligence. The court ruled that the AIA construction contract's insurance waiver clause protected the subcontractors from liability for fire damage covered by insurance. The owner's failure to maintain adequate insurance and notify the contractor meant the owner bore the risk of uninsured losses, not the subcontractors. This case shows that proper contract language and insurance requirements can shield subcontractors from major liability claims.
Use AIA contract forms with clear insurance waiver provisions—they provide strong legal protection against owner claims for insured losses
Ensure the owner maintains adequate insurance and receives proper notice of coverage; if they don't, they absorb the risk of uninsured losses, not you
Document that you've complied with all insurance requirements in the contract; failure to do so can eliminate your protection