The facts about Indemnification
SB 625 by Sen. Danny Martiny and Rep. Tony Ligi

Please Support SB 625!

Right now, Louisiana’s businesses are forced to accept liability for someone else’s negligence – called indemnification. Indemnification is not specific to one industry. Usually small companies are forced by large, multi-state and international companies to contractually take on this burden. SB 625 prohibits contractually transferring negligence/liability.

In a perfect world, two equal parties should be able to contract at will. This isn't a perfect world and often the parties certainly are NOT equal. Small business (who usually don’t have full-time attorneys) are not able to negotiate these clauses out of contracts. In today’s economy, small businesses need work to keep employees employed and their company with some cash flow—meaning refusing business is not an option.

This notion that insurance covers the cost just isn't true in most cases.  Insurers are not willing to write policies because insurers are unable to determine their exposure and are unwilling to gamble on the unknown.

And then... there's the public policy issue... Public policy is a very powerful concept that should not be tossed around lightly. So, why argue that public policy is at stake with indemnification clauses...

When a party is permitted to insulate itself from responsibility for its own wrongdoing by transferring liability to another party, societal values are clearly compromised. Most importantly, being completely insulated from answering for its negligence, companies have no incentive to take  precautions to prevent accidents. Plus just based on sheer size, these multi-national corporations are able to strong arm smaller companies into taking this responsibility away from them. In circumstances involving the abuse of raw power like this, legislatures often intervene as a matter of public policy. Such intervention clearly upholds rather than hinders free enterprise.

SB 625 ends Indemnification!

What SB 625 says…

• Neither a trucking company nor a construction company can be forced to accept someone else’s liability/negligence;
• Neither a trucking company nor a construction company can be forced to purchase insurance to cover someone else’s liability;
• The laws of the state of Louisiana shall apply to and govern any construction contract to be performed in this state and any motor carrier transportation contract relative to loading or unloading activities, or any services incidental thereto, which occur in this state; and
• This legislation is not retroactive. It takes affect January 1, 2011.

The bottom line is: We’ll keep our negligence. They keep theirs.

	Nineteen states have already taken steps to protect their small businesses. We want Louisiana to do the same.

	What’s wrong with indemnity clauses?
	In this case, negligence was apportioned to two parties. The judgment awarded is $5 Million dollars and is apportioned 5% to the injured trucker and 95% to the shipper.

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