H.F. _____ Section 1. NEW SECTION . 537A.5 Indemnity agreements —— 1 construction contracts. 2 1. As used in this section: 3 a. “Construction contract” means a public, private, foreign, 4 or domestic contract or agreement relating to the construction, 5 alteration, repair, or maintenance of any real property in 6 this state and includes agreements for architectural services, 7 demolition, design services, development, engineering services, 8 excavation, or other improvement relating to real property, 9 including buildings, shafts, wells, and structures, whether on 10 ground, aboveground, or underground. 11 b. “Indemnify” or “hold harmless” includes any requirement 12 to name the indemnitee as an additional insured in the 13 indemnitor’s insurance coverage. 14 c. “Lower-tier party” means a party to the contract that 15 acts as a subcontractor, specialty contractor, or supplier. 16 d. “Upper-tier party” means a party to the contract that 17 acts as a general contractor. 18 2. A provision in a construction contract that requires 19 one party to the contract to indemnify, hold harmless, insure, 20 or defend the other party to the contract, including the other 21 party’s officers, employees, or agents, against liability, 22 claims, damages, losses, or expenses, including attorney 23 fees, arising out of bodily injury to persons or damage to 24 property caused by or resulting from, in whole or in part, 25 the negligence, act, or omission of the indemnitee or the 26 officers, employees, or agents of the indemnitee, is void and 27 unenforceable as contrary to public policy. 28 3. A construction contract may contain a provision 29 requiring indemnity, but such a provision shall be enforced 30 only to the extent that the provision requires either of the 31 following: 32 a. One party to the contract to indemnify, hold harmless, 33 or insure the other party to the contract, including the other 34 party’s officers, employees, or agents, against liability, 35 -1- LSB 2087YC (2) 84 je/rj 1/ 4

H.F. _____ claims, damages, losses, or expenses, including attorney 1 fees, only to the extent that the liability, claims, damages, 2 losses, or expenses are caused by, or arise out of, the acts 3 or omissions of the indemnitor or the officers, employees, or 4 agents of the indemnitor. 5 b. A party to the contract to purchase a project-specific 6 insurance policy, including an owner’s or contractor’s 7 protective insurance, project management protective liability 8 insurance, or builder’s risk insurance. 9 4. This section does not apply to the indemnity of a surety 10 by a principal on any surety bond or to an insurer’s obligation 11 to its insureds. 12 5. If an upper-tier party to a construction contract is 13 named as an additional insured or additionally named insured 14 on a commercial general liability or similar liability policy 15 of insurance of a lower-tier party to a construction contract, 16 the coverage to the upper-tier party shall be limited to the 17 cost of defense and vicarious liability, and the policy shall 18 not extend coverage for the upper-tier party’s own negligence, 19 whether sole or partial. 20 6. If a court action or other binding dispute resolution 21 proceeding is brought or initiated against an upper-tier party 22 for personal injury by an employee of a lower-tier party to a 23 construction contract, and it is ultimately determined that the 24 upper-tier party to the construction contract has no liability 25 to the employee other than vicarious liability, the upper-tier 26 party has a claim of indemnity for all costs, including costs 27 of experts and attorney fees, associated with defending such 28 action against any party in the contractual chain determined 29 to have any liability for the personal injury. Any liability 30 of the employee for the employee’s own personal injury shall 31 be attributed to the employee’s employer for purposes of this 32 subsection. This indemnification obligation shall be joint and 33 several among the parties found liable for the personal injury. 34 EXPLANATION 35 -2- LSB 2087YC (2) 84 je/rj 2/ 4

H.F. _____ This bill relates to indemnification provisions in 1 construction contracts. 2 The bill provides that a provision in a construction 3 contract which requires one party to the contract to indemnify 4 the other party against claims based on acts or omissions 5 of the party being indemnified is void and unenforceable as 6 contrary to public policy. The bill provides that an indemnity 7 provision in a construction contract is enforceable if it 8 requires one party to the contract to indemnify the other 9 party against claims based on acts or omissions of the party 10 providing the indemnification, or if it requires a party 11 to purchase a project-specific insurance policy, including 12 an owner’s or contractor’s protective insurance, project 13 management protective liability insurance, or builder’s risk 14 insurance. The bill does not apply to the indemnity of a 15 surety by a principal on any surety bond or to an insurer’s 16 obligation to its insureds. 17 The bill defines a “lower-tier party” to a contract to mean 18 a party to the contract that acts as a subcontractor, specialty 19 contractor, or supplier. The bill defines an “upper-tier 20 party” to a contract to mean a party to the contract that 21 acts as a general contractor. The bill provides that if 22 an upper-tier party to a construction contract is named as 23 an additional insured or additionally named insured on a 24 commercial general liability or similar liability policy of 25 insurance of a lower-tier party to a construction contract, 26 the coverage to the upper-tier party is limited to the cost 27 of defense and vicarious liability, and the policy will not 28 extend coverage for the upper-tier party’s negligence. The 29 bill provides that if a court action or other binding dispute 30 resolution proceeding is brought against an upper-tier party 31 for personal injury by an employee of a lower-tier party 32 to a construction contract, and it is determined that the 33 upper-tier party to the construction contract has no liability 34 to the employee other than vicarious liability, the upper-tier 35 -3- LSB 2087YC (2) 84 je/rj 3/ 4

H.F. _____ party has a claim of indemnity for all costs associated with 1 defending the action against any party in the contractual chain 2 determined to have any liability for the personal injury. 3 The bill provides that any liability of the employee for the 4 employee’s own personal injury shall be attributed to the 5 employee’s employer for purposes of such an action. The bill 6 provides that such an indemnification obligation will be joint 7 and several among the parties found liable for the personal 8 injury. 9 -4- LSB 2087YC (2) 84 je/rj 4/ 4