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Bill would prohibit certain indemnity agreements in shipping contracts

Special to the Legal News

Published: April 9, 2015

Rep. Kristina Roegner has said enacting House Bill 71 would be a significant step in leveling the playing field between motor carriers and shippers.

Roegner, R-Hudson, said the measure would prevent shippers, in the case of their own negligence, from demanding that a motor carrier or a motor carrier’s insurance provider pay for any defense and damages arising from the shipper’s negligent actions.

“What happens when a shipper is negligent in maintaining their grounds and a truck driver, while at the shipper’s site, steps in an open hole and sustains injuries totaling $265,000? What happens when a truck driver, who is exposed to benzene at a chemical company over years of shipping that product, is diagnosed with leukemia that leads to $149,000 in medical costs?” she said.

“The answer to these two real Ohio examples is that the shipper exercised their indemnity clauses in their contracts, and the trucking companies, although they had no fault in the incidents, had to pick up the tab.”

HB 71, which is before the House Judiciary Committee, would prohibit certain indemnity agreements in motor vehicle carrier transportation contracts.

The bill declares void as against public policy a provision contained in, collateral to, or affecting a motor carrier transportation contract that indemnifies, defends or holds harmless the “promisee” from or against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the promisee.

“This is not only fair and equitable, but should also reduce motor carriers insurance costs as now they would only be liable for their own actions,” Roegner said.

Historically, motor carriers and shippers have argued over the legal responsibility regarding injuries caused by industrial accidents.

“Primarily shippers have won this battle because they have had the ability to demand indemnification (hold harmless) clauses in shipper/motor carrier contracts in which the motor carrier would have to pay damages arising from the shipper’s negligence,” Roegner said.

That pattern is changing across the U.S. as 41 states have enacted measures similar to HB 71.

“These statutes generally prohibit that portion of a transportation contract in which the motor carrier must indemnify the shipper for loss or damage resulting from the negligence (or intentional acts or omissions) of the shipper,” Roegner said.

HB 71 would not apply to intermodal shipping.

“It should also be noted that this legislation would not prohibit indemnification provisions altogether, rather it will prohibit only those indemnification clauses that would require the motor carrier to pay for the accidents, injuries, claims (or) damages that are caused by the negligent or wrongful acts of the shipper,” Roegner said.

HB 71 is co-sponsored by Reps. Louis Blessing III, Doug Green, Barbara Sears, Timothy Derickson, Tim Schaffer, Terry Boose and Heather Bishoff.

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