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SPONSOR: |
Ruiz |
DATE TYPED: |
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HB |
433 /a HBIC /a HJC |
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SHORT TITLE: |
Void Certain Indemnification Agreements |
SB |
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ANALYST: |
Maloy |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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NFI |
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Responses
Received From
Office
of the Attorney General
State
Highway and Transportation Department
Construction
Industries Division, Regulation and Licensing Department
SUMMARY
Synopsis
of HJC Amendment
The House Judiciary Committee amended HB 433 to
eliminate duplicative / unnecessary wording.
“Alteration, repair and maintenance” are all combined in the first word
of the list, “construction”. As such,
this is a non-substantive amendment.
Synopsis of HBIC Amendment
The House Business and Industries Committee
amended HB 433 to “clean-up” language, and to broaden the language relating to
the sureties effected (replacing “a construction contract” bond with “any
surety bond”).
Synopsis of Original Bill
House Bill 433 changes
liability insurance laws governing construction contracts. Specifically, the bill provides that agreements
to indemnify one party against damages, losses and expenses arising out of
bodily injury or property claims resulting from the negligence of the
indemnitee (the party that is to benefit from the liability coverage) shall
be void.
HB 433 provides that these
indemnification terms shall be enforceable when the claim is the result of
negligence on the party of the indemnitor (the party carrying the liability
coverage).
Finally, HB 433
requires project-specific insurance.
Significant Issues
This bill prohibits a
party that is negligent and the cause of the damage from benefiting from an
indemnification clause.
The intent is to
encourage greater care on the part of the indemnitee. Further, it will protect responsible,
well-insured contractors from being penalized for the lack diligence and care
of others.
Also, requiring
project-specific insurance policies will better ensure that a worker will not become
injured on the job only to find that his injuries, and the cost of care, are
not adequately covered by the appropriate, responsible party (providing the
injury is not the result of the worker’s own negligence). When workers are not adequately covered, the
result is a hit to taxpayers.
FISCAL IMPLICATIONS
HB 433 has no direct
fiscal impact on the state. However,
this bill should have a secondary effect of lowering insurance and workers’
compensation premiums. This may lower
over-head costs of doing business in
SJM/sb