That's exactly the problem with the General Liability insurance industry.   Why should a framing subcontractor, drywall subcontractor, or interior trim sub-contractor be responsible for soil movement or any other defect which they have no responsibility for?
The developer is the primary contractor that develops lots in a subdivision for building.  The subs have nothing to do with off-sites, plan development, engineering, etc.   Most subs that work on subdivision homes supply labor only, but the developers have chosen to shift all their responsibility to each and every sub, due to these clauses in contracts which requires the sub's general liability insurance to take care of all the problems.

As a sub who has been involved in these type of "shift the liability: contracts with a developer, - the only person that benefits is the developer.   Thereafter, the sub's insurance rates go sky-high, often putting the sub out of business, while the developer skates along "scot" free, continues to make unbelievable amounts of profit, and continues to build, often knowing they have defect problems with their plans, or the location of these new subdivisions.  After all, they can just sue the sub, and take no responsibility for their part.

As far as my company is concerned this is legalized extortion.   Until you have been involved with these type of indemnity contracts, you don't know what your talking about.    Developers need to take responsibility for their own development problems.failures.

carol