On August 25, 2016, Illinois adopted into law the Snow Removal Service Liability Limitations Act. The law, in part, provides that any provision, clause, covenant or agreement entered into on and after August 25, 2016 that is part of or in connection with a snow removal and ice control services contract is against public policy and void if it requires one party to indemnify or hold harmless the other party from any tort liability resulting from its own acts or omissions.
The full text of the Illinois law can be found by clicking here.
Effect of the New Law
Most snow removal contracts’ indemnification clause likely read as follows: “To the fullest extent permitted by law, you shall, at your own cost and expense, defend and indemnify (property owner) from any and all allegations directed at the indemnified party. To the fullest extent permitted by law, you shall indemnify and hold harmless the indemnified parties from any and all liabilities, obligations, claims, demands, settlements, and penalties, for any incidents arising out of based upon, or in connection with your performance."
Translation: If anything went wrong, the snow contractor took the fall, even if the property owner/manager was at fault for an accident. Property owners'/managers’ contracts historically provided for them to be indemnified for all costs associated with a claim (including attorneys’ fees and indemnity), regardless of fault and the contractor would have no case to fight.
The new law positively impacts snow removal contractors who were accustomed to paying for losses even if they weren’t at fault. This new law may come as a surprise to many property owners/managers who transferred all losses to the contractor via the indemnification clause. The new law places the liability with the appropriate party. The bottom line is property owners/managers can no longer pass their liability on to the contractor or vice versa.
There are exceptions to the new law. The law doesn't apply to:
- Contracts for snow removal or ice control on public roads with public bodies;
- Contracts for snow removal or ice control with a public utility; and,
- This means that if one of the parties to the contract is a public body or public utility, that public body or utility can legally transfer liability to the other party regardless of fault.
- An insurance policy, surety bond or workers’ compensation.
- This means that parties to a contract may contractually agree to provide insurance for the other party, including naming a party as an additional insured on its general liability policy. This Act will not affect bonds or rights and remedies under the Workers’ Compensation Act.
Conclusion and Recommendations
Contractors, property owners/managers should be aware of the following:
- All contracts entered into prior to August 25, 2016, which contain an indemnification clause indemnifying the other party for their fault will remain enforceable.
- All contracts entered into on and after August 25, 2016, which contain an indemnification clause indemnifying the other party for their fault will be void and unenforceable, and neither party will be allowed to seek indemnity from the other.
- All parties entering into new snow and ice removal contracts should consider revising their contracts to provide indemnity but only for that portion of a loss which arises out of its fault, not the other party. Contractors should consider requiring that the owner indemnify it to the extent a loss was caused by the property owner/manager, and vice versa.
- The new law doesn’t affect the parties’ rights to request insurance from one another, including additional insured status on a policy.
It’s recommended that you review your current contracts with an attorney to ensure that your contract contains an enforceable indemnification clause.
The Accredited Snow Contractors Association is lobbying for similar legislation in all 50 States. Currently, Michigan, Pennsylvania, New Jersey and New York have bills pending.