As 2013 comes to a close, thirty-nine (39) states have some type of anti-indemnity statute in place with respect to the transportation industry. Following in the footsteps of the construction industry, these statutes generally prohibit contractual indemnification that attempts to shift risk to one party, irrespective of fault. The statutes do not, however, prohibit provisions that serve to shift risk to a negligent party. While the intended purpose behind the statutes was originally to prevent motor carriers from bearing the liability of a shipper’s own negligence, for which they had no responsibility (i.e. improper loading), in practice the effect is much more far reaching. The impact of these statutes within the transportation industry is substantial in that it prohibits the transfer of risk when there are any claims or allegations concerning a party’s own negligence. Further, if a transportation contract provision is found to be in violation of an anti-indemnity statute, it will be held unenforceable, potentially leaving a party with no protection at all. Notably, the effect of anti-indemnity statutes can be thwarted by properly securing additional insured coverage.
With almost eighty percent (80%) of the states now enacting anti-indemnity litigation with respect to transportation, and more expected to follow, it is imperative that the impact of these laws on litigation be considered in entering transportation contracts. While the anti-indemnity motor transportation statutes are relatively similar in overall effect, they generally fall into one of four categories, depending on the statute’s language. The categories, and the particular states that fall into each category, are as follows:
- Statutes that prohibit motor carriers and shippers from contracting to indemnify the shipper against the shipper’s negligence-based and intentional act-based liability.
- New Mexico
- Statutes that prohibit unspecified third parties (i.e. a shipper, broker, etc.) from requiring motor carriers to indemnify the third party for any negligence-based or intentional act-based liability.
- South Dakota
- Statutes that use boilerplate promisor and promisee language to prohibit indemnification for negligence-based or intentional act-based liability in any provision that affects a motor carrier agreement/contract.
- Statutes that use boilerplate promisor and promisee language to prohibit any non-motor carrier from requiring motor carriers to indemnify the non-motor carrier for its negligence-based and intentional act-based liability.
- North Carolina
- South Carolina
- West Virginia
Additionally, five (5) states, Alabama, North Dakota, Texas, Washington, and Arizona, all have idiosyncratic statutes that address motor carrier indemnification, but in a manner that does not align with other state statutes.
Finally, most state statutes include certain exceptions to the general ban on motor carrier indemnification. Please refer to each individual state’s statute summary to account for any variation from this broad summary.