Indemnity protection continues to spread across the country

| 4/22/2011

New laws in three states are intended to help level the playing field for truck drivers. Lawmakers in Arizona and Utah approved bills to do away with indemnification clauses in motor carrier transportation contracts, while Iowa lawmakers addressed construction contracts.

Arizona Gov. Jan Brewer signed into law a bill to void indemnity provisions in all future contracts for the transportation, loading, unloading or incidental services of property by motor carriers. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

Previously HB2359, the new law takes effect July 20.

Joe Rajkovacz, OOIDA’s director of regulatory affairs, said indemnification amounts to somebody else using a trucker’s insurance to cover their negligence. He said the growing number of states to adopt protections is welcome news for truckers.

“Shippers and receivers can’t be allowed to shift their insurance costs to truckers simply by using bullying tactics when contracting for service or holding truckers hostage when delivering their freight. This is a true example of ‘leveling the playing field.’ ”

Shippers that improperly load product are prevented from shifting liability. Contractual language to the contrary will be void.

In neighboring Utah, Gov. Gary Herbert signed into law a bill to make contracts unenforceable that provide for shippers to be indemnified for losses caused by their own negligence.

Sen. Stephen Urquhart, R-St. George, explained the need for the protection when discussing indemnification clauses that are included in motor carrier contracts with refineries.

“They have been required to indemnify the refinery. If anything happened that was the refinery’s fault the motor carrier would pick up the cost. That’s kind of silly. So we are changing that,” Urquhart told lawmakers during Senate floor discussion on HB73.

The rule change takes effect May 10.

As the Arizona law states, Utah’s new rule also defines affected contracts as any written agreement for the transportation of property for compensation or hire, entry on property to load, unload or transport property, or any service incidental to such activity, including the packing or storage of property.

Iowa law already offers protections from the clauses, but Gov. Terry Branstad signed into law a bill that specifically addresses construction contracts. It takes effect July 1.

Previously SF396, the new law frees trucking companies, professional drivers and construction companies from being forced to take responsibility for damage that is not their fault.

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