Mountain Law: New Colorado law affects liability under snow and ice removal contracts
August 7, 2018
In the last state legislative session, the General Assembly passed, and Colorado Governor John Hickenlooper signed into law, Senate Bill 18-062 known as the "Snow Removal Service Liability Act." The act is formally expected to go into effect in August 2018. The act is based on model legislation drafted by an industry trade group known as the Accredited Snow Contractors Association (ASCA), which has made strides getting similar legislation introduced in other states. Colorado joins Illinois as the only state so far to actually adopt the act.
In ASCA's view, the snow and ice management industry is fighting costly insurance premiums that have escalated in part due to property owners unfairly requiring snow and ice removal contractors to contractually assume various liabilities. For example, a snow and ice removal contract for a condominium project might dictate that the contractor not plow until there are two inches of accumulation on the ground, yet require the contractor to indemnify the condominium association for any slip-and-fall incident. Under such an arrangement, the contractor could be liable for a slip-and-fall incident when there was only one inch of accumulation on the ground and the contractor was not even required to plow.
The act addresses such issues by declaring void as against public policy clauses in snow and ice removal contracts that require one person to indemnify, hold harmless or defend another person. While the act technically prohibits clauses that accrue to the benefit of either property owners or contractors (what the act calls receivers and providers), its clear goal given ASCA being the drafter is to protect contractors.
The act applies to any contract for plowing, shoveling, snow removal (or removal of "mixed precipitation"), deicing, or any service incidental thereto, such as operating or moving snow removal or deicing equipment or materials. It protects not only contractors directly, but also their employees and agents. It's unclear if the term employees in the act would be read to cover independent contractors. The act does not apply to contracts for services on public roads or with public bodies.
The act does not prevent property owners from requiring contractors to carry certain insurance coverage and to name such owners as additional insureds on the policies. If a claim is made, this effectively allows a property owner to make a claim on the contractor's insurance policy the same as the contractor. These types of contractual insurance provisions are already prevalent in snow and ice removal contracts and will potentially become more common following the act. To the extent that contractors continue to be required to maintain certain insurance coverage with property owners named as an additional insureds, it is unclear how the act will ultimately achieve its goal of reining in insurance premiums.
The act is somewhat similar to a different Colorado law that prevents construction professionals from being responsible for someone else's fault. Like that law, the act does not appear to prevent claims being made against snow and ice contractors for their own fault, as opposed to someone else's, if such language is carefully drafted not to run afoul of the act.
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In sum, snow and ice removal contracts in Colorado now cannot require either property owners or contractors to indemnify, hold harmless or defend the other (including employees and agents). A property owner, including a condominium association, can still require a snow and ice contractor to name the owner as an additional insured on insurance policies providing specified coverage. New or existing snow and ice removal contracts should be reviewed by legal counsel to ensure that they provide acceptable terms within the bounds of the act.
Noah Klug is owner of The Klug Law Firm, LLC, in Summit County, Colorado. He may be reached at 970-468-4953 or firstname.lastname@example.org.
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