By Keith Goble
state legislative editor
The number of states to outlaw certain indemnification clauses in trucking contracts is growing. Louisiana, Iowa and Georgia are among the states to act in recent months in an effort to level the playing field for trucking operations.
Indemnity clauses serve to hold harmless the shipper from any responsibility for loss or damage to product.
Joe Rajkovacz, OOIDA’s director of regulatory affairs, said the push for indemnity protections is welcome news for truckers who must cope with unfair burdens.
“There are multiple ways these indemnity ‘scams’ have played out for truckers. One of the most obvious is the preconditioning of a driver being able to make a delivery when the receiver institutes a bogus insurance requirement,” Rajkovacz said.
“While some motor carriers went to the expense to try and meet the ridiculous requirements, most truckers were forced to pay for unloading services performed by a company contracted to the receiver and where the receiver gets a significant ‘cut’ of the action. Al Capone probably wished he’d been able to set up that scam.”
More than 20 states have passed some version of indemnification limitations, including a new Louisiana law that prohibits the clauses in motor carrier and construction contracts. Shippers who improperly load product are prevented from shifting liability to the trucker. Contractual language to the contrary signed since Aug. 15 is void.
In Iowa, trucking contracts are now prohibited from including provisions that require indemnification or holding harmless shippers from loss or damage. Already in effect, the new law doesn’t apply to various uniform interchange agreements under NAFTA. It is effective for new or renewed contracts.
A recently enacted Georgia law prohibits indemnification clauses associated with annual permits for trucks exceeding height limitations. No longer can an indemnity bond or proof of insurance protection for $300,000 be required to obtain a permit.
Georgia law previously required bonds or insurance protection held for the benefit of the owners of bridges and other highway structures, such as traffic signals, that were damaged by a vehicle operating under authority of an overheight permit.
Pennsylvania lawmakers have sent a bill to the governor that would void indemnity provisions in all future contracts for the transportation, loading, unloading or incidental services of property by motor carriers.
“This bill is about fairness,” stated Rep. Mark Longietti, D-Hermitage. “Pennsylvania is one of the largest motor carrier states in the country, and this bill will help motor carriers to remain viable, particularly in these tough economic times.” LL