SB24 Alabama 2023 Session

Summary

Primary Sponsor

Greg AlbrittonSenator

Republican

Session

Regular Session 2023

Title

Relating to construction contracts; to provide regulations for indemnification agreements in certain construction contracts.

Summary

SB24 regulates indemnification clauses in Alabama construction contracts by limiting indemnity for the other party's sole negligence or misconduct and by requiring a monetary cap and insurance when indemnifying for one's own negligence.

What This Bill Does

It prohibits requiring indemnification for liability arising from the sole negligence or misconduct of the other party in a construction contract. It allows indemnification for the indemnitor's own negligence only if the contract includes a monetary limit and the indemnitor obtains commercially available insurance to cover that limit. The indemnity is enforceable only up to the insured amount, and the contract may be modified by a court if it violates the act, without invalidating the entire contract. The act outlines definitions, sets exemptions (including certain professional services and road/bridge contracts), clarifies it applies only to contract-to-contract indemnities (not third-party claims or public awarding authorities), and specifies it becomes effective for contracts executed or awarded after January 1, 2024.

Who It Affects

• Construction contract parties (contractors, subcontractors, and owners) in Alabama, who must design indemnity clauses to avoid liability for sole negligence or misconduct and must include monetary caps and insurance if indemnifying for another party's own negligence.
• Indemnitors and indemnitees (the party providing or receiving indemnity) who must adhere to insurance and monetary-cap requirements and are subject to limits on indemnity amounts; public awarding authorities are not affected by these indemnity obligations.

Key Provisions

• Defines construction contract, contractor, indemnitee, indemnitor, party, and subcontractor for purposes of the act.
• Prevents requiring indemnification for liability arising from the sole negligence, wantonness, recklessness, or intentional misconduct of the indemnitee.
• Allows indemnification for the indemnitor's own negligence only if (a) the indemnity is part of the construction contract, (b) the agreement includes a monetary limitation, and (c) the indemnitor obtains commercially available insurance covering that amount.
• If indemnification is permitted, it is enforceable only up to the monetary limitation and the required insurance must cover that amount.
• If a provision violates the act, a court may modify it to be consistent with the act without invalidating the entire contract.
• Excludes certain provisions and contexts (insurance maintenance, surety indemnities, joint and several liability, workers' comp, and specific professional/road/bridge contract provisions) from being affected or overridden, and clarifies the act does not apply to third-party tort claims or indemnities owed to public awarding authorities.
• Effective for construction contracts executed or awarded after the act's effective date, with the act becoming effective January 1, 2024.

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; construction contracts, indemnification agreements regulated.