What's happening
This bill voids construction contract provisions requiring additional insured coverage if they demand coverage for another party's negligence.
Why it matters
Limits Risk-Shifting in Construction Contracts. By voiding contract terms that require one party to be added as an "additional insured" for the other party's own negligence, the bill ensures that companies cannot force their partners (like subcontractors) to bear insurance risks for mistakes they didn’t make.
Protects Smaller Contractors and Subcontractors. This change prevents larger or more powerful parties from shifting financial responsibility for their own negligence onto smaller businesses, potentially lowering insurance costs and reducing unfair liability exposure for subcontractors.
Clarifies Insurance Practices. The bill closes a loophole where parties could use insurance requirements (rather than indemnification clauses) to end-run existing law. This provides clearer guidance for what insurance construction contracts can legally require, making contract negotiations and insurance procurement more straightforward.
Impacts Future Construction Agreements Only. The bill applies only to contracts entered into after the law takes effect, so existing agreements are not affected. This offers clarity and predictability for businesses entering into new construction contracts in New York.
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Who cares
Headline styles
End Extra Insurance Requirements
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to judiciary
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ban Extra Insurance in Construction
In Assembly Committee · Judiciary · Sponsor Michael Cusick
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5239
2017-2018 Regular Sessions
IN SENATE
March 16, 2017
Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary
AN ACT to amend the general obligations law, in relation to the invalidity of additional insurance provisions
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 5-322.1 of the general obligations law, as amended by chapter 67 of the laws of 1993, is amended to read as follows:
1. A covenant, promise, agreement or understanding in, or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of a building, structure, appurtenances and appliances including moving, demolition and excavating connected therewith, purporting to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property contributed to, caused by or resulting from the negligence of the promisee, his agents or employees, or indemnitee, whether such negligence be in whole or in part, is against public policy and is void and unenforceable; provided that this section shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer; provided further, that a provision in a construction contract that requires the purchase of additional insured coverage, or any coverage endorsement, or provision within an insurance policy providing additional insured coverage, is void and unenforceable to the extent that it requires coverage, the scope of which is prohibited under this subdivision. This subdivision shall not preclude a promisee requiring indemnification for damages arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of a party other than the promisee, whether or not the promisor is partially negligent.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00258-01-7
S. 5239 2
§ 2. 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.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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 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. Indemnitees 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 obligations 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 prohibition 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
2016-2015: A.4259 - Died in Judiciary/S.2925 Passed Senate; 2013-2014: A.8747-A Died on 3rd Rdg./S.6606-A - Passed Senate.
Fiscal implications for state and local governments
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.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.