LRB-3760/1
RPN:jld:kjf
2001 - 2002 LEGISLATURE
October 30, 2001 - Introduced by Representative Gard. Referred to Committee on
Judiciary.
AB606,1,2
1An Act to create 895.491 of the statutes;
relating to: indemnification and hold
2harmless provisions and additional endorsements in construction contracts.
Analysis by the Legislative Reference Bureau
Under current law, any provision in an agreement relating to the construction
maintenance or alteration of a structure that limits or eliminates tort liability is void.
In Gerdmann v. United States Fire Ins. Co., 119 Wis. 2d 367 (Ct. App. 1984), the court
held that an indemnity clause in a construction contract was not affected by this law.
The current law does not apply to an insurance contract or to a worker's
compensation plan.
Under this bill, any provision in or collateral to a construction contract that
requires one person (the indemnitor) to indemnify (secure against loss or damage)
or hold harmless another person (the indemnitee) for damages, injury, or death is
void to the extent that the provision applies to acts or omissions of the indemnitee
or a person other than the indemnitor's agents or employees. For example, under the
bill, if, as part of a construction agreement, the contractor agreed to pay any amount
that the owner was required to pay to an injured party as the result of the owner's
negligence that occurred during the construction of the building, that part of the
agreement would be void. The bill also provides that any additional insured
endorsement furnished as part of a construction agreement cannot extend coverage
so as to result in one person indemnifying another person for the acts or omissions
of that second person.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB606, s. 1
1Section
1. 895.491 of the statutes is created to read:
AB606,2,3
2895.491 Certain indemnity provisions in construction contracts void. 3(1) In this section:
AB606,2,84
(a) "Construction contract" means an agreement for architectural services,
5alterations, construction, demolition, design services, development, engineering
6services, excavation, maintenance, repair, or other improvement to real property,
7including any agreement to supply labor, materials, or equipment for an
8improvement to real property.
AB606,2,149
(b) "Indemnification or hold harmless clause" means any provision in an
10agreement that requires an indemnitor to indemnify or hold harmless an indemnitee
11from, or insure or defend an indemnitee against, any claim, damage, loss, or expense
12attributable to bodily injury, sickness, disease, or death, or to injury to or destruction
13of property other than the property improvement that is the subject of the
14construction contract.
AB606,2,1715
(c) "Indemnitee" means the person whom the indemnitor is required to
16indemnify, hold harmless, insure, or defend under an indemnification and hold
17harmless clause.
AB606,3,218
(d) "Indemnitor" means the person who agrees and is required to indemnify or
19hold harmless an indemnitee from, or insure or defend an indemnitee against, any
20claim, damage, loss, or expense attributable to bodily injury, sickness, disease, or
1death, or to injury to or destruction of property other than the property improvement
2that is the subject of the construction contract.
AB606,3,10
3(2) Any indemnification or hold harmless clause in or collateral to a
4construction contract is against public policy and void to the extent that the clause
5requires the indemnitor to indemnify or hold harmless an indemnitee from, or insure
6or defend an indemnitee against, any claim, damage, loss, or expense attributable
7to bodily injury, sickness, disease, or death, or to injury to or destruction of property
8other than the property improvement that is the subject of the construction contract,
9caused by or arising out of the acts or omissions of the indemnitee or any other
10person, except the indemnitor or the indemnitor's agents or employees.
AB606,3,15
11(3) Notwithstanding sub. (2), an indemnification and hold harmless clause and
12an additional insured endorsement may provide that the indemnitor indemnify an
13indemnitee for losses that the indemnitee incurs because of the indemnitee's
14negligent failure to discover or remedy a dangerous condition created by the
15indemnitor.
AB606,3,23
16(4) This section does not apply to an indemnity agreement executed by an
17indemnitor in favor of a surety company, or to a surety bond or an insurance contract,
18including owners and contractors protective insurance, project management
19protective liability insurance, builder's risk insurance, or worker's compensation
20plan. However, any additional insured endorsement furnished in accordance with
21an agreement in or collateral to a construction contract may not extend coverage to
22the person covered by that additional insurance if that would result in a violation of
23sub. (2).
AB606,4,2
1(1) This act first applies to construction contracts entered into on the effective
2date of this subsection.
AB606,4,54
(1)
This act takes effect on the first day of the 3rd month beginning after
5publication.
