Illinois has just passed the Snow Removal Service Liability Limitation Act (Public Act 099-0889), which applies immediately to any contracts entered into on or after August 25, 2016. This bill affects certain clauses in contracts between snow and ice removal providers and any party they contract with (usually property owners/managers) for snow and ice removal. Any clauses that contain indemnification, duty to defend and hold harmless language are now void, unenforceable and against public policy. This is similar to legislation in the construction industry where there is an anti-indemnification statute based on public policy. The idea being that those in power, property managers/owners should not be able to shift their risk to snow removal contractors. The snow and ice removal company cannot be required to indemnify, hold harmless or defend the property manager/owner and vice versa. Instead, liability is to be apportioned based on each party's proportionate negligence.
This means that the parties can no longer go after each other for indemnification and defense costs when the party initiating the action for indemnification or defense costs was negligent themselves, and that negligence led to some type of injury. Some likely effects of this act will be:
1) Impacting insurance rates for snow removal companies and property owners (overall, good for snow removal companies, bad for the property owners/managers who used to include these kinds of provisions)
2) Alleviating insurance carriers' concerns about contract language
3) Increasing the value of professional snow and ice management services as property owners will want a good service since they cannot pass on their liability onto the removal service anymore.
The importance of the act should be significant to snow removal contractors. With this change, contractors will be on the hook for only for their negligence, and not that of those who hired them. It will also vastly impact the insurer of these contractors. It will help to take frivolous lawsuits to trial which would otherwise settle due to the costs of litigation both on behalf of its named insured, but also on behalf of additional insureds. For those on the property management or ownership side, the risks associated with slip and fall cases has increased, and a key tool in risk transfer has been eliminated. We expect that the early cases will test the validity of the statute, and breach of contract claims.
Link to the Snow Removal Service Liability Limitation Act: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=099-0889
