12/19/2025
Insights from the Defense 3: In October of 2025, Representative Fiona McFarland filed (sponsored) House Bill 145 which proposes to raise sovereign immunity caps in multiple phases from the current caps of $200,000 per individual/$300,000 per incident to as high as $600,000 per individual/$1.2 million per incident at the final phased increase in October 1, 2031. House Bill 145 also allows local governments to negotiate settlements with claimants in amounts that exceed the proposed statutory caps. If passed, the higher caps will undoubtedly increase the costs of private contractors doing business with governmental agencies under service contracts, project-specific contracts, professional services contracts, construction contracts, term contracts or independent contractor agreements, due to the private contractor’s required absorption of higher potential liabilities.
Immunity caps factor into the defense and indemnity analysis in that the contractor can rely on relatively limited exposure when it comes to contingent third-party liabilities of the agency. The typical fact pattern is this: a governmental agency is sued and then tenders its defense and indemnification to private companies whose contract work may be related to the third-party claim. Per the terms of the contract, the private contractor assumes the defense of the governmental agency but, since any exposure of that agency is currently limited to just $200,000 per claimant – often a fraction of the overall claim – the contractor can strategically defend the claim using the immunity limitations as a shield against overall exposure. If HB 145 is passed, however, the proposed statutory cap of up to $600,000 will eventually triple the contingent liability exposure for private companies and in most tort cases eliminate a strategic use of immunity limitations.
Read the full article on our website: www.weinsteintrialfirm.com