SB264 Alabama 2022 Session

Summary

Primary Sponsor

Greg AlbrittonSenator

Republican

Session

Regular Session 2022

Title

Construction contracts, indemnification provision for damages caused by another party, prohibited

Summary

The bill would bar certain indemnity clauses in construction contracts worth $50,000 or more that try to make one party cover damages caused by the other party's own actions.

What This Bill Does

It bans contracts for projects costing at least $50,000 from requiring a party to defend, indemnify, or hold harmless another for damages caused by that other party's own actions. If indemnity is allowed, it may only cover damages caused by the indemnifying party's own negligence, wantonness, recklessness, or intentional misconduct. It also restricts insurance provisions, so an additional insured requirement cannot cover claims arising from the other party's own conduct beyond the indemnity, and it clarifies certain exceptions and scope. The act applies only to contracts between parties to a construction contract, does not affect third-party tort claims, and takes effect immediately after passage.

Who It Affects

• Parties to construction contracts in Alabama with total project costs of $50,000 or more, who would be limited in shifting liability via indemnity and must keep indemnity tied to fault.
• Sureties and insurers involved in construction bonds or insurance, since the bill preserves some exceptions and restricts the scope of additional insured coverage to align with indemnity.

Key Provisions

• Section 3: A construction contract may not require a party to indemnify, defend, or hold harmless for damages caused by the negligence, wantonness, recklessness, or intentional misconduct of the other party.
• Section 4: If indemnity exists, it may only cover damages caused by the indemnifying party's own negligence, wantonness, recklessness, or intentional conduct.
• Section 5: A contract may not require providing insurance as an additional insured for claims arising from the other party's own conduct, and coverage cannot be broader than the indemnity.
• Section 6-9: The act does not apply to certain relationships (principal to surety, insurer to insured), applies only to indemnity between contract parties, does not affect third-party claims or joint liability/workers' compensation rules, and becomes effective immediately upon passage.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Contracts