Provides that provisions in construction contracts with respect to requirements for certain additional insurance coverage are void and unenforceable.
Ayes (57): Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Farley, Felder, Flanagan, Gallivan, Gianaris, Gipson, Golden, Griffo, Grisanti, Hannon, Hoylman, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Squadron, Stavisky, Stewart-Cousins, Tkaczyk, Valesky, Young, Zeldin
Excused (4): Espaillat, Hassell-Thomps, Kennedy, Smith
TITLE OF BILL: An act to amend the general obligations law, in relation to the invalidity of additional insurance provisions
PURPOSE: This bill would hold invalid any provision in a construction contract that requires the purchase of additional insured coverage the scope of which is prohibited under general obligations law section 5-322.1.
SUMMARY OF PROVISIONS:
Section 1 - Section 5-322.1 of the general obligations law declares void and unenforceable indemnification clauses in construction contracts where the indemnitee required the indemnitor to indemnify him for damages due in whole or in part to the indemnitee's negligence. Indemnitees have circumvented this prohibition by requiring the indemnitee to provide the indemnitor with additional insured coverage. This bill would correct this unfair practice.
Section 2: Establishes the effective date.
JUSTIFICATION: The New York State Legislature enacted 5-322.1 of the general obligations law to declare 'broad form' hold harmless provisions in construction contracts void and unenforceable. Additional insured provisions in construction contracts flies in the face of this prohibition and allows indemnitees to circumvent the law. This bill would correct this inequity. Similar legislation has recently been enacted in the State of Texas.
LEGISLATIVE HISTORY: New bill
FISCAL IMPLICATIONS: None
EFFECTIVE DATE: This act shall take effect on the thirtieth day after it shall have become a law and shall apply only to any covenants, promises, agreements or understandings in or in connection with or collateral to a contract or agreement entered into on or after such date.
STATE OF NEW YORK ________________________________________________________________________ S. 6606 A. 8747 S E N A T E - A S S E M B L Y February 12, 2014 ___________IN SENATE -- Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Judici- ary IN ASSEMBLY -- Introduced by M. of A. CUSICK -- read once and referred to the Committee on Judiciary AN ACT to amend the general obligations law, in relation to the invalid- ity of additional insurance provisions THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 5-322.1 of the general obligations law, as amended by chapter 67 of the laws of 1993, is amended to read as follows: 1. A covenant, promise, agreement or understanding in, or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of a building, struc- ture, appurtenances and appliances including moving, demolition and excavating connected therewith, purporting to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property contributed to, caused by or resulting from the negligence of the promisee, his agents or employees, or indem- nitee, whether such negligence be in whole or in part, is against public policy and is void and unenforceable; provided that this section shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer; PROVIDED FURTHER, THAT A PROVISION IN A CONSTRUCTION CONTRACT THAT REQUIRES THE PURCHASE OF ADDITIONAL INSURED COVERAGE, OR ANY COVERAGE ENDORSEMENT, OR PROVISION WITHIN AN INSURANCE POLICY PROVIDING ADDITIONAL INSURED COVER- AGE, IS VOID AND UNENFORCEABLE TO THE EXTENT THAT IT REQUIRES OR PROVIDES COVERAGE, THE SCOPE OF WHICH IS PROHIBITED UNDER THIS SUBDIVI- SION. This subdivision shall not preclude a promisee requiring indemni- fication for damages arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of a party other than the promisee, whether or not the promisor is partially negligent.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13069-01-3 S. 6606 2 A. 8747
S 2. This act shall take effect on the thirtieth day after it shall have become a law and shall apply only to any covenants, promises, agreements or understandings in, or in connection with or collateral to a contract or agreement entered into on or after such date.