General Contractors Could Face Increasing Exposure in Pennsylvania (PA)
Pennsylvania is currently one of five states in the country that does not prohibit broad indemnity by subcontractors to general contractors or owners of construction projects. Broad indemnity requires subcontractors to indemnify the owner or general contractor, regardless of who is at fault. Under broad indemnity provisions, subcontractors are required to indemnify the owners or general contractors even if a suit arises from the owner or general contractor’s sole negligence.
Pennsylvania House Bill 1887 was introduced on September 25, 2019 primarily sponsored by Rep. Michael Driscoll of Pennsylvania’s 173rd Legislative District. The Bill seeks to amend Act 164 of 1970 which contains no statutory prohibition of broad and intermediate forms of indemnity. The bill seeks to prohibit both broad and intermediate indemnity, allowing only limited indemnity provisions in construction contracts. Under limited indemnity provisions, any negligence of the indemnitee will bar a claim for indemnification from the indemnitor.
This legislation could have a major impact on general contractors in Pennsylvania, who have enjoyed broad indemnity provisions since the passage of Act 164. The Bill, which was referred to the Commerce Committee on September 25, 2019, would create greater exposure for general contractors and owners, while limiting exposure for subcontractors. Be sure to stayed tuned!
Thank you to Hunter McMullin for her contribution to this post. Please email Colleen E. Hayes with any questions.