Survey Of States That Currently Have “Anti-Indemnity” Acts
There are currently forty-four states that have some form of an “Anti-Indemnity Act”. They include:
Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
Additionally, Arkansas has proposed House Bill 1387, which would promote insurance coverage for construction contracts. House Bill 1387 provides that hold harmless clauses in public construction contracts are unenforceable. The bill was filed on February 5, 2007 and signed by the Governor on April 4, 2007 (For the full history of the bill, go to http://www.arkleg.state.ar.us/).
Efforts to Amend Illinois “Anti-Indemnity Act”
On February 1, 2005, Rep. Thomas Holbrook sponsored and introduced House Bill 0704.
The bill would have amended the Illinois “Anti-Indemnity Act”. The bill provided that “in contracts or agreements for the listed types of construction, alteration, repair, or maintenance, any covenant, promise, or agreement to procure an insurance policy to indemnify or hold harmless another person from that person’s own negligence is void as against public policy and wholly unenforceable.” House Bill 0704. The final date of action for this bill was on January 9, 2007.
On February 5, 2007, Rep. Holbrook sponsored and introduced House Bill 0555. The bill contained the exact same language as House Bill 0704. This bill is currently in the Illinois House, with the last date of action occurring on March 23, 2007 (Rule 19(a)/Re-referred to Rules Committee).
Illinois House Bill 0704 is important as other courts have held that an “Anti-Indemnity Act” also applies to agreements to procure insurance on behalf of another. In Walsh Construction Co. v. Mutual of Enumclaw, 338 Or. 1, 104 P.3d 1146 (2005), Walsh, a general contractor, entered into a subcontract agreement with Rust, the subcontractor, to perform work on a Walsh construction project. The subcontract required Rust to procure lability insurance naming the general contractor and its agents as additional insureds on the subcontractor’s liability policy. The subcontractor’s policy already contained a blanket additional insured endorsement that automatically extended the coverage that the subcontract required.
Later, a Rust employee was injured on the job and made a claim against Walsh. Walsh tendered the claim to the subcontractor’s insurer, Enumclaw. Enumclaw refused the tender claim and argued that the additional insured provision of the subcontract violated an Oregon Statute (ORS 30.140). Walsh settled with the injured party and then brought a breach of action claim against Enumclaw, alleging that the insurer breached its duty to defend and indemnify the contractor in a suit brought by an employee of the subcontractor. The Circuit Court granted summary judgment in favor of Enumclaw and the Court of Appeals affirmed. The Supreme Court, in affirming the decision of the Court of Appeals, held that the provision in a construction agreement, which requires a subcontractor to obtain additional liability insurance for the general contractor, is void. The court stated, “In sum, the text of ORS 30.140, and its historic evolution, strongly suggests that the statute prohibits not only ‘direct’ indemnity arrangements between parties to construction agreements but also ‘additional insurance’ arrangements by which one party is obligated to procure insurance for losses arising in whole or in part form the other’s fault.” Id. at 1150.