Michigan one step closer to indemnity protection

By Keith Goble, Land Line state legislative editor | 9/20/2012

An attempt to improve fairness for truck drivers doing business in Michigan is one step closer to becoming law. If signed into law, the Great Lakes State would become the 36th state to adopt the protection from certain unfair clauses in motor carrier contracts.

The House Transportation Committee voted unanimously Wednesday, Sept. 19, to advance a bill to the House floor to do away with indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

Senate lawmakers already approved the bill – SB873 – by unanimous consent. If approved by the full House, it would move to Gov. Rick Snyder’s desk.

The bill would outlaw the provisions in contracts that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”

States across the country have been busy the past few years changing rules on indemnity clauses. Already this year, Alabama, Hawaii, Massachusetts, Minnesota and South Dakota have acted to forbid the provisions from contracts.

Supporters say that indemnification clauses require freight carriers to take on liability for the negligence of shippers. As a result, truckers are responsible for trailer packing, even though shippers actually do the packing.

They say the contract clauses are bad for the trucking industry. Another complaint is they create a safety issue because the shipper’s incentive to perform its duties in a prudent and reasonably safe manner is eliminated.

Affected contracts in the Michigan bill would be defined as “a contract, agreement or understanding” between a motor carrier and a shipper covering the transportation of property for hire by the motor carrier, entry on property to load, unload or transport property, including the storage of property.

The protection would not apply to intermodal chassis, containers, or other intermodal equipment.

To view other legislative activities of interest for Michigan, click here.

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