Michigan approves indemnity protection

By Keith Goble, Land Line state legislative editor | 1/4/2013

A new law in Michigan is intended to improve fairness for truck drivers doing business in the state.

Gov. Rick Snyder signed into law a bill 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.

The Great Lakes State is the 36th state to adopt the protection from certain unfair clauses in motor carrier contracts. Michigan’s rule takes effect in March.

Previously SB873, the new law outlaws 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. In the past year alone, Alabama, Hawaii, Massachusetts, Minnesota and South Dakota acted to forbid the provisions in 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 law are 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 does 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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