Provides that provisions in construction contracts with respect to requirements for certain additional insurance coverage are void and unenforceable

BILL NUMBER:S6606A

Title of bill

An act to amend the general obligations law, in relation to the invalidity of additional insurance provisions

Purpose or general idea of bill

This bill would hold invalid any provision in a construction contract that requires the purchase of additional insured coverage the scope of which is prohibited under general obligations law section 5-322.1.

Summary of specific provisions

Section 1 - Section 5-322.1 of the general obligations law declares void and unenforceable indemnification clauses in construction contracts where the indemnitee required the indemnitor to indemnify him for damages due in whole or in part to the indemnitee's negligence. Indemni- tees have circumvented this prohibition by requiring the indemnitee to provide the indemnitor with additional insured coverage. This bill would correct this unfair practice.

Section 2: Establishes the effective date.

Justification

The New York State Legislature enacted 5-322.1 of the general obli- gations law to declare 'broad form' hold harmless provisions in construction contracts void and unenforceable. Additional insured provisions in construction contracts flies in the face of this prohibi- tion and allows indemnitees to circumvent the law. This bill would correct this inequity. Similar legislation has recently been enacted in the State of Texas.

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect on the thirtieth day after it shall have become a law and shall apply only to any covenants, promises, agreements or understandings in, or in connection with or collateral to a contract or agreement entered into on or after such date.