Honolulu, Hawaii



RE:    S.B. No. 824

       S.D. 2




Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii




     Your Committee on Judiciary and Labor, to which was referred S.B. No. 824, S.D. 1, entitled:




begs leave to report as follows:


     The purpose and intent of this measure is to make null and unenforceable any portion of a motor carrier transportation services contract or agreement that requires the carrier to indemnify, defend, or hold harmless the other party to the contract from any liability for that party's negligence or intentional acts or omissions.


     Your Committee received testimony in support of this measure from the Hawaii Transportation Association and one individual.


     Your Committee finds that this measure aims to protect innocent parties in transportation contracts that purport to make an innocent party indemnify a culpable party for the culpable party's own negligence or intentional acts or omissions.  Under these indemnification provisions, motor carriers become an insurer for the indemnitees.  Your Committee believes that these types of provisions are unconscionable and overly burdensome on motor carriers, which tend to be small, locally owned businesses that do not have sufficient bargaining power to negotiate these provisions out of their transportation services contracts.


     Your Committee also observes that although a motor carrier may obtain insurance to cover this type of potential liability, the cost to insure the other party's own negligence or intentional acts or omissions still falls inequitably on the motor carrier.


     Your Committee has amended this measure by:


     (1)  Requiring insurance companies that provide insurance coverage to motor carriers covering the indemnification of the other party to refund any portion of a motor carrier's premiums applicable to the indemnification for any transportation services contract affected by this measure, thereby providing assurance that motor carriers are not paying for unnecessary insurance coverage;


     (2)  Inserting an effective date of July 1, 2050, to allow for further discussion; and


     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 824, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 824, S.D. 2.


Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,