House File 253 - Introduced HOUSE FILE BY QUIRK Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to indemnity provisions in construction 2 contracts. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1584HH 83 5 ak/rj/5 PAG LIN 1 1 Section 1. NEW SECTION. 537A.5 INDEMNITY AGREEMENTS == 1 2 CONSTRUCTION CONTRACTS. 1 3 1. As used in this section: 1 4 a. "Construction contract" means a public, private, 1 5 foreign, or domestic contract or agreement relating to the 1 6 construction, alteration, repair, or maintenance of any real 1 7 property in this state and includes agreements for 1 8 architectural services, demolition, design services, 1 9 development, engineering services, excavation, or other 1 10 improvement relating to real property, including buildings, 1 11 shafts, wells, and structures, whether on, above, or 1 12 underground. 1 13 b. "Indemnify" or "hold harmless" includes any requirement 1 14 to name the indemnified party as an additional insured in the 1 15 indemnitor's insurance coverage. 1 16 c. "Lower=tier party" means a party to the contract that 1 17 acts as a subcontractor, specialty contractor, or supplier. 1 18 d. "Upper=tier party" means a party to the contract that 1 19 acts as a general contractor. 1 20 2. A provision in a construction contract that requires 1 21 one party to the contract to indemnify, hold harmless, insure, 1 22 or defend the other party to the contract, including the other 1 23 party's officers, employees, or agents, against liability, 1 24 claims, damages, losses, or expenses, including attorney fees, 1 25 arising out of bodily injury to persons or damage to property 1 26 caused by or resulting from, in whole or in part, the 1 27 negligence, act, or omission of the indemnitee or the 1 28 officers, employees, or agents of the indemnitee, is void and 1 29 unenforceable as against the public policy of this state. 1 30 3. A construction contract may contain a provision and 1 31 shall be enforced only to the extent that the provision 1 32 requires either of the following: 1 33 a. One party to the contract to indemnify, hold harmless, 1 34 or insure the other party to the contract, including the other 1 35 party's officers, employees, or agents, against liability, 2 1 claims, damages, losses, or expenses, including attorney fees, 2 2 only to the extent that the liability, claims, damages, 2 3 losses, or expenses are caused by, or arise out of, the acts 2 4 or omissions of the indemnitor or the officers, employees, or 2 5 agents of the indemnitor. 2 6 b. A party to the contract to purchase a project=specific 2 7 insurance policy, including an owner's or contractor's 2 8 protective insurance, project management protective liability 2 9 insurance, or builder's risk insurance. 2 10 4. This section does not apply to the indemnity of a 2 11 surety by a principal on any surety bond or to an insurer's 2 12 obligation to its insureds. 2 13 5. If an upper=tier party to a construction contract is 2 14 named as an additional insured or additionally named insured 2 15 on a commercial general liability or similar liability policy 2 16 of insurance of a lower=tier party to a construction contract, 2 17 the coverage to the upper=tier party shall be limited to the 2 18 cost of defense and vicarious liability, and the policy shall 2 19 not extend coverage for the upper=tier party's own negligence, 2 20 whether sole or partial. 2 21 6. If a court action or other binding dispute resolution 2 22 proceeding is brought or initiated against an upper=tier party 2 23 for personal injury by an employee of a lower=tier party to a 2 24 construction contract, and it is ultimately determined that 2 25 the upper=tier party to the construction contract has no 2 26 liability to the employee other than vicarious liability, the 2 27 upper=tier party has a claim of indemnity for all costs, 2 28 including costs of experts and attorney fees, associated with 2 29 defending such action against any party in the contractual 2 30 chain determined to have any liability for the personal 2 31 injury. Any liability of the employee for the employee's own 2 32 personal injury shall be attributed to the employee's employer 2 33 for purposes of this subsection. This indemnification 2 34 obligation shall be joint and several among the parties found 2 35 liable for the personal injury. 3 1 EXPLANATION 3 2 This bill relates to the use of indemnity provisions in 3 3 construction contracts. The bill prohibits the use of a 3 4 provision in a construction contract that requires one party 3 5 of the contract to indemnify or hold harmless the other party 3 6 to the contract for damages arising out of the negligence, 3 7 act, or omission of the indemnitee or the officers, employees, 3 8 or agents of the indemnitee as void and unenforceable as 3 9 against public policy. 3 10 The bill provides that a construction contract may either 3 11 contain a provision requiring a party to the contract to 3 12 purchase a project=specific insurance policy, or a provision 3 13 that requires one party of the contract to indemnify or hold 3 14 harmless the other party to the contract for damages arising 3 15 out of the negligence, act, or omission of the indemnitor or 3 16 the officers, employees, or agents of the indemnitor. The 3 17 bill does not apply to the indemnity of a surety by a 3 18 principal on a surety bond. 3 19 The bill provides that if an upper=tier party to a 3 20 construction contract is named as an additional insured on a 3 21 liability policy of a lower=tier party to a construction 3 22 contract, the coverage of the policy to the upper=tier party 3 23 shall be limited to the cost of defense and vicarious 3 24 liability and not to the upper=tier party's own negligence. 3 25 The bill also provides that if a court action or binding 3 26 dispute proceeding is brought by an employee of a lower=tier 3 27 party against an upper=tier party to a construction contract 3 28 and the upper=tier party is found to be without liability 3 29 other than vicarious liability, the upper=tier party shall 3 30 have a claim of indemnity for all costs of the court action or 3 31 dispute resolution proceeding. 3 32 The bill provides definitions of the terms "construction 3 33 contract", "indemnify" or "hold harmless", "lower=tier party", 3 34 and "upper=tier party". 3 35 LSB 1584HH 83 4 1 ak/rj/5