Gaining Ground in the Garden State

Gaining Ground in the Garden State

The new year is off to a speedy start. Across the country, snow and ice management companies have had at least a consistent start to 2017. ASCA Executive Director Kevin Gilbride reports back from New Jersey and provides an update on the association's legislative initiatives.

January 13, 2017
Association News Insurance News Misc.
Like you, the ASCA is off to a lightning fast start to 2017, especially as it pertains to our legislative initiatives.

As each session of Congress ends (both at the state and the federal level), any bill not passed is killed. If they choose to do so, the bill’s sponsor(s) can refile at the beginning of the next session. This means the ASCA is working in those states where we already had bills that didn’t get passed to get them reintroduced this year. We anticipate we will get bills reintroduced in all of the states where we had them last session.

Currently, we have these bills for the 2017 sessions:
• New Jersey: S181 and A3656
• Indiana: HB 1125 and S131

We expect new bill numbers issued in Michigan, Pennsylvania, New York, and Massachusetts. And in the coming weeks, we anticipate new bills in Wisconsin, Maryland and Rhode Island, as well.

Back to New Jersey and our fast start to the year, I received a call on Jan. 2 asking me to testify on the ASCA’s model legislation -- The Snow Removal Service Liability Limitation Act -- on Monday, January 9. As a result, on Monday the New Jersey Senate Commerce Committee voted unanimously for our bill and sent it to the Senate Floor for consideration.

To review, this bill, as amended, makes void and unenforceable any provision, clause, covenant, or agreement contained in, collateral to, or affecting a snowplow or deicing service contract that purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the promisee from or against any liability for loss or damage resulting from the negligent, intentional acts, or omissions of the promise. Under the amended bill, a snowplow or de-icing service contract does not include a contract to which the state, or any political subdivision or instrumentality thereof, is a party. The bill would also not apply to any contract in which the promisor has been given full authority to take all actions the promisor deems necessary to maintain the property of the promisee.

These contractual clauses are often referred to as indemnity clauses, which generally shift the responsibility to pay damages from one party to another party, often without regard to whom actually caused the loss. Many states have statutes, referred to as anti-indemnity statutes, to limit these contractual clauses in construction contracts. Currently in New Jersey, N.J.S.A.2A:40A-1, N.J.S.A.2A:40A-2, and N.J.S.A.39:14-2 limit indemnity clauses in certain construction contracts, contracts relating to architects, engineers, and surveyors, and motor carrier transportation contracts, respectively. This bill would similarly limit these types of contractual clauses in snowplow or de-icing service contracts.
In addition to our testimony, the New Jersey Chapter of the National Federation of Independent Business, New Jersey Farm Bureau, New Jersey Landscape Contractors Association, New Jersey Nursery and Landscape Association, and all were present and publicly supported the bill.

Basically, the legislation, sponsored by New Jersey State Senators Christopher “Kip” Bateman and Fred Madden, Jr., and co-sponsored by Senator Gerald Cardinale, will make New Jersey parking lots and surfaces safer and help reign in escalating insurance costs for snow contractors.  

Throughout the winter months, professional snow and ice management companies service high-traffic commercial and retail properties, such as shopping centers, big-box stores, and business campuses. The industry is fighting costly insurance premiums that have escalated due to several factors, but primarily due to contractual language that is forced upon them, holding them accountable for any and all incidents, damages and injuries related to snow and ice. Regardless if it was their responsibility.  

New Jersey contractors pay on average, 10% of their entire sales revenues for their commercial general liability policies. This premium is on average 6 times greater than they pay for the same insurance for their summer businesses such as landscaping, paving, and excavating businesses. And this doesn’t consider auto, health, workers comp and umbrella insurance policies that we are required to possess. Currently, only three insurance carriers will currently write these policies in New Jersey.  

This trend stems from property owners and property management companies – utilizing contract language that passes their negligence on to contractors through the use of hold-harmless and indemnification clauses. This language transfers all liability to the snow and ice management company, yet the property owner or management company dictates plowing and de-icing services. With us holding the liability, there is little incentive for them to have the job done right. This creates a safety issue for the citizens of New Jersey. Additionally, professional companies often walk away from signing these contracts, leaving a lesser snow plow guy to service a property, often with inadequate equipment and unprepared crews.

There is an identical bill in the New Jersey Assembly. It is Assembly Bill No. 3656, which is currently in the Assembly Consumer Affairs Committee.