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By Stephen R. McDonnell, Esq.
On July 11, 2022, Pennsylvania passed Act 68, which limits the reach of indemnification (or “hold harmless”) agreements in snow and ice removal contracts. As winter approaches, the new law presents questions for snow removal contractors, property owners, and insurance carriers alike.
Under Act 68, any indemnity clause that makes a snow removal contractor liable for any part of a service receiver’s (i.e. landlord’s) negligence is void if the receiver “affirmatively directed” the contractor not to remove snow. This makes broad form indemnity agreements (which require contractors to indemnify property owners for injuries arising out of their work, even when the owner bears sole responsibility) ineffective in situations where the owner has specifically directed the contractor not to remove snow.
For example, many snow removal contracts require the contractor to clear snow after two inches of snowfall. Before Act 68, even if it snowed less than two inches or where it was unclear when two inches of snow had accumulated, a broad form indemnity agreement arguably would have made the contractor liable for any injuries on the owner’s premises during a storm. Now, after Act 68, if a snow removal contract only triggers after two inches of snowfall, the contractor would not need to indemnify the property owner for injuries during smaller storms. Since the two-inch trigger contract specifically directed the contractor not to plow snow under two inches, Act 68 would void the broad form indemnity clause.
Supporters of Act 68 believe it will ultimately reduce insurance rates in the snow and ice management industry. State Representative Christopher B. Quinn reasons Act 68 will make it easier for snow removal contractors to find insurance and lower premiums while also incentivizing property owners to keep their property safe. The Accredited Snow Contractors Association agrees, claiming property owners neglect their premises and use broad form indemnity clauses to unfairly shift liability onto snow removal contractors.
Nonetheless, Act 68 may create disputes among snow removal contractors, property owners, and insurance carriers over whether contract trigger language “affirmatively direct[s]” a contractor not to act. Contractors and property owners should review their service contracts, and insurance carriers should evaluate whether Act 68 impacts their clients’ indemnity agreements.